December 21, 2008
Staff research, Publications
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Futures Markets, Oil Prices and the Intertemporal Approach to the Current Account
The intertemporal approach to the current account suggests modeling movements in the current account in a forward-looking, dynamic framework. In this framework, the current account reflects consumption smoothing of agents that lend and borrow from the rest of the world in the face of transitory shocks to income. -
December 9, 2008
Senior Loan Officer Survey - Fourth-Quarter 2008
Survey respondents reported a further widespread tightening in lending conditions. Respondents attributed the tightening of lending conditions mainly to concerns about the general economic outlook, although a worsening of industry-specific factors was also cited as a contributing cause. -
How Important Is Liquidity Risk for Sovereign Bond Risk Premia? Evidence from the London Stock Exchange
This paper uses the framework of arbitrage-pricing theory to study the relationship between liquidity risk and sovereign bond risk premia. The London Stock Exchange in the late 19th century is an ideal laboratory in which to test the proposition that liquidity risk affects the price of sovereign debt. -
December 6, 2008
Beads to Bytes: Canada's National Currency Collection
This volume explores money and the role it has played, and continues to play, in society, through the lens of Canada's National Currency Collection. The Collection is an extraordinary repository of coins, bank notes, and related paraphernalia from around the world. Soft cover, 124 pages (2008).
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Indebtedness and the Household Financial Health: An Examination of the Canadian Debt Service Ratio Distribution
The household debt-to-disposable income ratio in Canada increased from 110 per cent in 1999 to 127 per cent in 2007. This increase has raised questions about the ability of households to service their increased debt if faced with a negative economic or socio-economic shock. -
A Survey and Risk Analysis of Selected Non-Bank Retail Payments Systems
Payment services offered by non-banks have flourished in recent years. The author provides an overview of the different kinds of non-bank retail payments schemes currently available in Canada, illustrating each by focusing on a specific example. -
Firm Size and Productivity
This paper examines the relationship between firm size and productivity. In contrast to previous studies, this paper offers evidence of the relationship not only from manufacturing firms, but from non-manufacturing firms as well. -
November 11, 2008
The Role of Dealers in Providing Interday Liquidity in the Canadian-Dollar Market
Access to information about the future direction of the exchange rate can be extremely valuable in the foreign exchange market. Evidence presented in this article suggests that Canadian dealers are more likely to provide interday liquidity to foreign, rather than Canadian, financial customers, since foreign financial flows can be more informative about future movements in the exchange rate. The author reveals a statistical relationship between the supply of liquidity provided by non-financial firms and that provided by dealing institutions across time, and across markets, and suggests that the relationship between the positions of commercial clients and market-makers, and the role played by dealers in interday liquidity provision, has been understated in the market microstructure literature. -
November 11, 2008
Merchants' Costs of Accepting Means of Payment: Is Cash the Least Costly?
In a competitive sales environment, merchants are compelled to offer consumers the option of paying for goods and services using a variety of payment methods, including cash, debit card, or credit card. Each method entails different costs and benefits to merchants. To better understand the costs of accepting retail payments, the Bank of Canada surveyed over 500 Canadian merchants and found that most consider cash the least costly. This article investigated this perception by calculating the variable costs per transaction of accepting different means of payment. The findings are that costs for each payment method vary by merchant and transaction value, with debit cards the least costly payment for a broad cross-section of merchants.