November 11, 2008
Publications
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November 11, 2008
The Market Impact of Forward-Looking Policy Statements: Transparency vs. Predictability
Central banks continuously strive to improve how they communicate to financial markets and the public in order to increase transparency. For this reason, many central banks have begun to include guidance on the policy rate in the form of forward-looking statements in their communications. This article examines the debate over the usefulness of providing such statements from both theoretical and empirical standpoints. The evidence presented here suggests that the use of forward-looking statements in Bank of Canada communications has made the Bank more predictable, but not necessarily more transparent. -
November 11, 2008
Conference Summary: International Experience with the Conduct of Monetary Policy under Inflation Targeting
Central bankers from inflation-targeting and non-inflation-targeting countries around the world and several distinguished scholars assembled at the Bank of Canada in July 2008 to review the international experience in some detail. This article highlights topics covered in the special lectures and sessions, including how inflation targeting can manage external shocks, various ways in which monetary policy decisions are taken, and the issues of transparency and communications. It also reports on the discussion in the closing panel, which considered options for the future of inflation targeting. -
October 25, 2008
Senior Loan Officer Survey - Third-Quarter 2008
Survey respondents reported widespread tightening in both the pricing and non-pricing dimensions of business-lending conditions. Respondents attributed the tightening of lending conditions mainly to the ongoing turmoil in credit markets and to concerns about the general economic outlook. -
October 23, 2008
Monetary Policy Report – October 2008
Three major interrelated global developments are having a profound impact on the Canadian economy and making the outlook more uncertain than it was at the time of the July Monetary Policy Report Update.
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October 10, 2008
Business Outlook Survey - Autumn 2008
Responses to the autumn survey indicate that the combination of weak U.S. demand, volatile financial markets, and slowing momentum in the West are weighing more heavily on business activity in Canada.
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September 15, 2008
Productivity in Canada: Does Firm Size Matter?
The research findings highlighted in this article suggest that firm-size differences play a significant role in explaining the productivity gap between Canada and the United States. The authors review factors that lead to a positive relationship between productivity and size and then look at Canadian evidence of this relationship at the firm level. They quantify the extent to which the change in Canadian productivity as well as the Canada-U.S. productivity differences can be accounted for by the change in the importance of large firms and identify several factors that play a role in determining average firm size and aggregate productivity. -
September 15, 2008
Offshoring and Its Effects on the Labour Market and Productivity: A Survey of Recent Literature
Offshoring has become an increasingly prominent aspect of the globalization process. Evidence over the past two decades suggests that offshoring has not exerted a noticeable impact on overall employment and earnings growth in advanced economies, but it has likely contributed to shifting the demand for labour towards higher-skilled jobs. There appear to be some positive effects of offshoring on productivity, but such effects differ by country. -
September 15, 2008
Adjusting to the Commodity-Price Boom: The Experiences of Four Industrialized Countries
Between 2002 and 2008, global commodity prices rose to unprecedented levels. This article examines the process of adjustment to the commodity boom in four industrialized, commodity-exporting countries (Australia, Canada, New Zealand, and Norway). The article focuses on both the direct adjustment within the commodity-producing sectors (via increased employment and capital spending) and the indirect adjustment in the macro economy. The analysis finds that the indirect adjustment process, which was triggered by the increase in incomes that the commodity-price boom generated, has been the most important part of the adjustment in all four economies. Through this channel, aggregate demand rose, exchange rates appreciated, and adjustment was facilitated in other sectors, such as manufacturing and construction. -
September 15, 2008
The Effects of Recent Relative Price Movements on the Canadian Economy
Although the standard of living of Canadians has improved as a result of terms-of-trade gains created by the sharp rise in real commodity prices over the past five years or so, the commodity-price increase, combined with an exchange rate appreciation and real income gain, triggered structural adjustments by altering underlying economic incentives. The frictions generated in adjusting to the relative price shock have likely contributed to hold back aggregate productivity growth. Dupuis and Marcil examine the structural adjustments that have been required-in particular, the resource reallocation among the different sectors of the economy-and its effects on employment, output, and productivity, as well as the responses of final domestic demand and external trade flows.