target of 3% for 1992. Inflation was contained to 4.8% in 1990, 5.6% in 1991 and then decreased to 1.5% in 1992 and 1.9 in 1993, well below the target of 3%. This suggests the Bank of Canada's restrictive monetary policy overshot its target, suppressing GDP and employment growth in 1992 and 1993 in what would normally have been an economic recovery period. In fact, complex macro-economic modelling undertaken estimates that "excessive monetary restraint" of the Bank of Canada reduced real GDP growth by 1.5 percentage points in 1990, 2.9 percentage points in 1991 and 4.0 percentage points in 1993. Tax increases Another cause of Canada's recession were several tax increases instituted by the federal government between 1989 and 1991. These increases related to sales, excise and payroll taxes were modelled to have reduced real GDP growth by 1.6, 2.4 and 5.1 percentage points, respectively, in 1990, 1991 and 1992, although if these tax increases had not been implemented the federal government's national debt would have increased a significant amount. A third, less important factor in Canada's recession was the weakness of the US economy at the time, which was calculated to have had the effect of reducing Canada's economic growth by .6, 2.2 and 1.1 percentage points in 1990, 1991 and 1992. High Value of Canadian Dollar and Low Productivity An additional reason for the recession, especially it being deeper and longer in Canada than in the US, was the high value of the Canadian dollar, as high as 86-cents American in 1991, which made Canada's export manufactured goods, such as automotive parts, textiles and intermediate industrial goods and materials, uncompetitive in international markets. Combined with Canada's manufacturing productivity at the time being among the lowest in the G7 (caused by a lack of investment in new equipment or in research and development) and the removal of certain protective tariffs through the 1989 Canada-US Free Trade Agreement, this caused substantial job losses in the manufacturing sector with a significant number of manufacturers closing down or moving to the US, Mexico or the Caribbean. Impact of recession on unemployment The recession severely depressed job markets throughout the country unemployment rising from a low of 7.2% in October 1989, to a high of 12.1% in November 1992; it would take 10 years before unemployment recovered a 7.2% level (it was reached in October 1999). For instance, in Montreal (Quebec) unemployment affected