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  • June 18, 2005

    Recent Trends in Canadian Defined-Benefit Pension Sector Investment and Risk Management

    Bank of Canada Review - Summer 2005 Eric Tuer, Elizabeth Woodman
    Defined-benefit (DB) pension plans account for the majority of employer pension fund assets. In recent years, a number of DB plans have become underfunded, in sharp contrast to the 1990s, when many plans had large actuarial surpluses. The deterioration in the financial health of DB plans has underscored various longer-term structural issues that could make it increasingly difficult for plan sponsors to manage the financial risks of these plans. Tuer and Woodman examine how funding deficits, a greater focus on plan liabilities, a low yield environment, and changing investment beliefs are influencing investment decisions in the Canadian DB pension sector. They review the funding of DB plans, changing views on the equity-risk premium, and the shift towards liability-centred approaches to investment and how these developments are affecting pension sector investment. They also consider additional influences on the pension sector, including the limited supply of long-term bonds, the elimination of the foreign-property rule, and the movement towards fair-value accounting and a financial-economics approach to actuarial valuation, as well as their implications for financial markets.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial institutions, Recent economic and financial developments
  • April 25, 2005

    Understanding China's Long-Run Growth Process and Its Implications for Canada

    Bank of Canada Review - Spring 2005 Michael Francis, François Painchaud, Sylvie Morin
    In the past 25 years, China has introduced numerous reforms, gradually moving from a centrally planned economy towards a socialist market economy capable of robust and sustainable economic growth. China's increasing integration into the global economy, which has been fuelled by this recent and rapid economic growth, has already begun to affect the economies of other countries and to present challenges for policy-makers, both in China and abroad. In addition to examining the determinants of China's past and current growth, the authors consider factors that are likely to support continued growth in the future and assess the implications for both the world and the Canadian economies.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Development economics, International topics
  • April 22, 2005

    Borders, Common Currencies, Trade, and Welfare: What Can We Learn from the Evidence?

    Bank of Canada Review - Spring 2005 John F. Helliwell, Lawrence L. Schembri
    Recent evidence indicates that the intensity of economic exchange within and across borders is significantly different: linkages are much tighter within, than among, nation-states. These findings, however, do not necessarily imply that borders and separate national currencies represent significant barriers to trade that should be removed, since the evidence is also consistent with the alternative hypothesis, that domestic exchange is more efficient because domestic producers are better able to satisfy the requirements of local consumers, owing to common tastes and institutions and the existence of local information and social networks. Focusing primarily on trade linkages within and between Canada and the United States, the authors review the evidence on the extent to which national borders lessen the intensity of international economic linkages, primarily trade in goods and services, and the effects on domestic welfare. They also examine the evidence on the impact of common currencies on trade and welfare. They determine that, since the empirical models employed to date in this research cannot distinguish between alternative explanations of the evidence, it is not yet possible to draw firm conclusions for policy-making.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rate regimes, International topics, Monetary policy framework
  • April 20, 2005

    Conference Summary: Canada in the Global Economy

    Bank of Canada Review - Spring 2005 Lawrence L. Schembri
    The Bank of Canada's 2004 research conference examined the real and financial linkages between the Canadian economy and the economies in the rest of the world. Although Canada has profited enormously from its openness to international trade in goods, services, and financial assets, many of the most significant shocks to the Canadian economy in recent years have come from abroad. For these reasons, understanding the extent and nature of the external linkages, their implications for the Canadian economy, and the process by which the Canadian economy adjusts to external shocks is of critical importance both for monetary policy and for monitoring the financial system. This article describes the purpose of the conference—to deepen economists' understanding of these important issues—and provides highlights of the papers presented in each of the five sessions, as well as summaries of the keynote lecture and the discussion of the policy panel.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Balance of payments and components, Exchange rates, International topics
  • April 4, 2005

    Business Outlook Survey - Spring 2005

    Businesses are more optimistic about the economic outlook than in the winter survey. The greater stability of the Canadian dollar in the three months since the previous survey has helped to ease concerns among exporters. Businesses continue to expect strong domestic sales.
    Content Type(s): Publications, Business Outlook Survey
  • January 30, 2005

    Annual Report 2004

    The Bank of Canada has played an integral role in Canadian society for 70 years. When the Bank opened its doors in the spring of 1935, this country was struggling to define itself and to survive the economic and social turmoil of the Great Depression. Like Canada’s economy, its central bank has evolved and grown over the years. It has faced critical challenges and embraced change. But the Bank’s mandate has not changed. It is now, as it was then, to provide an effective, national monetary authority for Canada.
    Content Type(s): Publications, Annual Report
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