Canada’s three major federal political parties are split on whether having balanced budgets matter. For the Conservatives and the New Democratic Party (NDP), it matters greatly; for the Liberals, not so much.

In theory, there’s no problem with running small deficits. Indeed, they can be useful when economies are in recession because they can help kick-start the economy. Increases in government spending provide jobs. Tax cuts put more money in the hands of consumers or businesses so they can spend more.

The problem is psychological. Once there are deficits, it can be difficult to get rid of them because politicians don’t like to increase taxes or cut government programs that benefit their constituents. That’s the reason why the Conservative government passed balanced budget legislation this past June. It requires that the finance minister to explain publicly why there’s a deficit; provide a plan to get back in balance; and put a freeze on operating spending and cut cabinet ministers’ salaries until balance is achieved.

NDP Leader Thomas Mulcair didn’t support the legislation when it was passed in June, but he’s now going along with it.

However, John McCallum, Liberal candidate for the new riding of Markham — Thornhill, current member of Parliament for Markham — Unionville and former chief economist with Royal Bank of Canada, says this law is just a gimmick.

“Balanced budget legislation has never worked,” he says. That’s because if a government feels the need to run a deficit, it can change the legislation.

That’s exactly what Liberal Leader Justin Trudeau would do if his party wins the election. In fact, McCallum says this is an appropriate time to run deficits because “economist agree that the outlook for economic grow is anemic for some years to come.” Specifically, he notes that Canada also has a “massive” infrastructure deficit, so “now’s the time to invest in infrastructure.”

Craig Alexander, vice president for economic analysis with the C.D. Howe Institute in Toronto, agrees that spending on infrastructure is “desperately needed,” but he doesn’t consider it a short-term fiscal stimulus tool as it takes a good deal of time to identify projects and get them up and running. “The effect will be felt years from now,” he says.

Nevertheless, Alexander says that governments need “a strong commitment” to balanced budgets. “There are always new ideas for spending initiatives. When you commit to balanced budgets over the medium term, you have to focus on choices,” he explains.

Multiple attempts to interview the Conservatives and NDP about their positions on balanced budgets for this article were unsuccessful.

In evaluating these approaches, several key points need to be considered:

1. Size of deficits
Trudeau is talking about deficits of $9.9 billion, $9.5 billion and $5.7 billion in the next three years. Although those may sound big, it represents only 0.5% of $2 trillion in annual gross domestic product (GDP). In contrast, the deficits that Harper’s government ran in fiscal 2009-14 averaged 1.4% of GDP while the government of another Conservative, Brian Mulroney, had average deficits of 5.5% of GDP in fiscal 1985-93.

2. Impact of business tax changes
Mulcair’s proposed increase in the corporate tax rate could have a negative impact on the economy by discouraging companies from locating here, including Canadian firms that export and have the option of locating their plants or offices elsewhere. However, the impact would be medium and longer term in nature as it takes time to make such decisions and implement them. However, a cut in the small business tax rate, which all three leaders propose, could have a shorter-term impact as small companies might start hiring as soon as they know they will paying less taxes.

3. Impact of changes to the tax system and benefits for individuals
Mulcair’s and Trudeau’s plans to reverse the Harper government’s Family Tax Cut, which includes income splitting and the enhanced child credit, would have a near-term negative impact as it will leave families with less money to spend. However, reversing the increase in the contribution limits for tax-free savings accounts, which Mulcair and Trudeau both plan to do, wouldn’t hurt consumer spending in the short term but will affect retirees’ income longer term.

4. Paying down the debt
This hasn’t been an issue in this election. That perhaps isn’t surprising as Canada’s federal debt of $616 billion as of March 31 is relatively low, at 31.2% of GDP, and will continue to decline as the economy continues to expand — even with modest deficits. That is, as long as the deficit as a percentage of GDP is smaller than the increase in GDP, it will shrink in relative terms.

This is the seventh article in the Canada Votes 2015 series.