Bank of Canada Review - Autumn 1994

November 9, 1994
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BoC Review - Autumn 1994/Revue BdC - Automne 1994

Cover page

Roman Republic: Denarius, 108–107 BC

To the left of the figure is the name of the moneyer M. Herenni (Marcus Herennius), and to the right is the control mark, a horizontal P and dot. About the size of a 10-cent piece, this denarius is part of the National Currency Collection, Bank of Canada.

Photography by James Zagon.
Content Type(s): Publications, Bank of Canada Review
November 9, 1994

The Bank of Canada's new Quarterly Projection Model (QPM): An introduction

Bank of Canada Review - Autumn 1994 Stephen S. Poloz, David Rose, Robert Tetlow
This article provides an overview of the Bank of Canada's new economic model, the Quarterly Projection Model (QPM), which has been under development at the Bank since 1989. The model has two roles. It is used to make economic projections, which are conducted quarterly and form an important basis for discussions of monetary policy between staff and senior management. QPM is also a research tool: it was developed to analyse important changes to the economy or macroeconomic policies which require a deeper understanding of long-term economic forces. The model pays particular attention to factors shaping long-term equilibrium, such as stocks of wealth, capital, government debt and net foreign assets. Various sources of dynamics, including the adjustment of forward-looking expectations, operate to determine the transition path to equilibrium and the consistency of expectations. The article discusses the history of QPM and earlier economic models at the Bank, and provides a simple overview of how the model works.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Economic models
November 8, 1994

The demand for currency and the underground economy

Bank of Canada Review - Autumn 1994 Thérèse Laflèche
The underground economy in Canada has attracted increased attention over the past few years, yet there is no precise way to measure its size. Recent estimates vary between 4 per cent and 15 per cent of gross domestic product. This article provides an overview of measurement issues and recent estimates. It then focusses on the "monetary" approach to estimating the size of the underground economy. This approach is based on the assumption that the demand for bank notes provides a clue as to the size of the underground economy. The article concludes that estimates that use this approach must be viewed with considerable caution. They are based on a number of assumptions that are difficult to verify and that significantly affect the results.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary aggregates
November 7, 1994

The use of Canadian bank notes

Bank of Canada Review - Autumn 1994 Louise Hyland
This article delves into the microeconomics of note circulation, reviewing main factors affecting the demand for bank notes over the last 50 years, including new technology such as automated banking machines. It also discusses trends in the average value of notes in circulation and in the demand for notes of different denominations.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Bank notes