Despite a slowdown in economic growth as measured by the GDP, Canadians’ real incomes and purchasing power have continued to rise, according to a study released today by the C.D. Howe Institute.

In the study, policy analyst Colin Busby says the positive shock in Canada’s terms of trade, which has seen prices for many imports fall and prices for exports rise, mitigates against expansionist fiscal policy and loose monetary policy.

Over last decade, he notes, the global demand for oil and gas has sent energy export prices to historic highs, and the costs of Canada’s imports have fallen, as reflected in prices for machinery and equipment, electronics and other manufactured goods from abroad. The import-price decline is due in part to our appreciated currency (and a falling U.S. dollar) and to imports of low-cost manufactures from countries such as China. Both factors increase Canada’s purchasing power abroad.

To account for terms-of-trade effects, Busby uses “command GDP,” an income measure that gives a rough approximation of the purchasing power increase generated by expensive exports and cheap imports. By this measure, he finds, rises in Canadians’ real incomes have outstripped growth in real GDP.