Business fluctuations and cycles

• December 20, 2006

  Why Monetary Policy Matters: A Canadian Perspective

  Bank of Canada Review - Winter 2006-2007 Christopher Ragan

  This article provides answers to several key questions about Canadian monetary policy. First, what is monetary policy? Second, why does the Bank of Canada focus on the control of inflation rather than other macroeconomic variables? Third, how do the Bank's actions influence the rate of inflation? And, finally, how can monetary policy deliver genuine and significant benefits to society?

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Business fluctuations and cycles, Inflation: costs and benefits, Monetary policy framework

• The Role of Debt and Equity Finance over the Business Cycle

  Staff Working Paper 2006-45 Francisco Covas, Wouter den Haan

  The authors show that debt and equity issuance are procyclical for most listed U.S. firms.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Financial stability JEL Code(s): E, E3, G, G1, G3

• ToTEM: The Bank of Canada's New Quarterly Projection Model

  Technical Report No. 97 Stephen Murchison, Andrew Rennison

  The authors provide a detailed technical description of the Terms-of-Trade Economic Model (ToTEM), which replaced the Quarterly Projection Model (QPM) in December 2005 as the Bank's principal projection and policy-analysis model for the Canadian economy.

  Content Type(s): Staff research, Technical reports Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): E, E1, E17, E2, E20, E3, E30, E4, E40, E5, E50, F, F4, F41
• October 22, 2006

  ToTEM: The Bank of Canada's New Projection and Policy-Analysis Model

  Bank of Canada Review - Autumn 2006 Paul Fenton, Stephen Murchison

  The Terms-of-Trade Economic Model, or ToTEM, replaced the Quarterly Projection Model (QPM) in December 2005 as the Bank's principal projection and policy-analysis model for the Canadian economy. Benefiting from advances in economic modelling and computer power, ToTEM builds on the strengths of QPM, allowing for optimizing behaviour on the part of firms and households, both in and out of steady state, in a multi-product environment. The authors explain the motivation behind the development of ToTEM, provide an overview of the model and its calibration, and present several simulations to illustrate its key properties, concluding with some indications of how the model is expected to evolve going forward.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Business fluctuations and cycles, Economic models

• The Macroeconomic Effects of Non-Zero Trend Inflation

  Staff Working Paper 2006-34 Robert Amano, Steve Ambler, Nooman Rebei

  The authors study the macroeconomic effects of non-zero trend inflation in a simple dynamic stochastic general-equilibrium model with sticky prices.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Inflation and prices, Inflation targets JEL Code(s): E, E2, E24, E3, E32

• Linear and Threshold Forecasts of Output and Inflation with Stock and Housing Prices

  Staff Working Paper 2006-25 Greg Tkacz, Carolyn A. Wilkins

  The authors examine whether simple measures of Canadian equity and housing price misalignments contain leading information about output growth and inflation.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Inflation and prices JEL Code(s): C, C5, C53, E, E4

• Are Average Growth Rate and Volatility Related?

  Staff Working Paper 2006-24 Partha Chatterjee, Malik Shukayev

  The empirical relationship between the average growth rate and the volatility of growth rates, both over time and across countries, has important policy implications, which depend critically on the sign of the relationship.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles JEL Code(s): E, E3, E32

• Launching the NEUQ: The New European Union Quarterly Model, A Small Model of the Euro Area and U.K. Economies

  Staff Working Paper 2006-22 Anna Piretti, Charles St-Arnaud

  The authors develop a projection model of the euro area and the United Kingdom. The model consists of two country blocks, endogenous to each other via the foreign demand channel.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): C, C5, C53, E, E1, E17, E3, E37

• Monetary Policy in an Estimated DSGE Model with a Financial Accelerator

  Staff Working Paper 2006-9 Ian Christensen, Ali Dib

  The authors estimate a sticky-price dynamic stochastic general-equilibrium model with a financial accelerator, à la Bernanke, Gertler, and Gilchrist (1999), to assess the importance of financial frictions in the amplification and propagation of the effects of transitory shocks.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Econometric and statistical methods, Economic models JEL Code(s): E, E3, E32, E37, E4, E44

• Forecasting Canadian Time Series with the New Keynesian Model

  Staff Working Paper 2006-4 Ali Dib, Mohamed Gammoudi, Kevin Moran

  The authors document the out-of-sample forecasting accuracy of the New Keynesian model for Canada.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Econometric and statistical methods, Economic models JEL Code(s): C, C1, C12, E, E3, E32, E37