Posts

• December 22, 2003

  Current Account Imbalances: Some Key Issues for the Major Industrialized Countries

  Bank of Canada Review - Winter 2003-2004 Jocelyn Jacob

  The resurgence of sizable current account imbalances in the major economies in recent years, particularly the tripling of the U.S. deficit, has led to renewed academic and public discussions about their sustainability. Jacob's main objective is to show that current account balances are simply the outcome of various relative structural and cyclical forces between trading partners. He reviews the factors behind the changes in the current account positions of the three largest industrial economies (the United States, Japan, and the euro area). Two strong determinants shaping the current account balances are the faster increase in U.S. productivity compared with that of other major economies and, more recently, the loosening in the U.S. fiscal stance. Jacob also reviews a range of outside assessments from such sources as the Organisation for Economic Co-operation and Development and the International Monetary Fund, as well as the academic literature, to determine the possible risks to macroeconomic and financial stability.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rates, International topics
• December 21, 2003

  The Rationale for Cross-Border Listings

  Bank of Canada Review - Winter 2003-2004 Éric Chouinard, Chris D'Souza

  Technological progress and the liberalization of capital flows have both contributed to the considerable changes in global equity markets over the past few decades. Yet obstacles to international capital flows still exist, leading to segmentation of markets and creating incentives for corporate managers to adopt financial policies such as international cross-listing. In exploring the costs and benefits of cross-listing, Chouinard and D'Souza find that U.S. exchanges are attracting an increasing share of cross-listed firms. The empirical studies they review suggest that the cost of equity capital declines following a foreign listing as a result of lower transactions costs or an improvement in the quality and quantity of firm-specific information available to investors. As well, informational asymmetries across countries prevent simultaneous price discovery across exchanges.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets, International topics
• December 18, 2003

  Debt Strategy 2004/05 Consultation Document

  The purpose of the consultations is to obtain the views of market participants on issues relating to the design and operation of the Government of Canada domestic debt programs for fiscal year 2004/05 and beyond.
• December 18, 2003

  Debt Strategy Consultations 2004/05 - Views Sought on Issues Relating to the Design and Operation of Government Domestic Debt Programs in 2004/05 and Beyond

  A consultation document on issues relating to the design and operation of the government's domestic debt programs for fiscal year 2004/05 and beyond, prepared jointly by the Department of Finance and the Bank of Canada, is being made public today.

  Content Type(s): Press, Market notices

• Common Trends and Common Cycles in Canadian Sectoral Output

  Staff Working Paper 2003-44 Francisco Barillas, Christoph Schleicher

  The authors examine evidence of long- and short-run co-movement in Canadian sectoral output data. Their framework builds on a vector-error-correction representation that allows them to test for and compute full-information maximum-likelihood estimates of models with codependent cycle restrictions.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Econometric and statistical methods JEL Code(s): C, C1, C15, C2, C22, C3, C32, E, E3, E32
• December 8, 2003

  Past Adjustments and Future Trends in the Canadian Economy

  Remarks David Dodge London Chamber of Commerce London, Ontario

  When giving a speech near the end of a year, it is common practice to look back over the past 12 months, consider what we have learned from the events and experiences of the year, and think a bit about what might lie ahead. I became Governor of the Bank of Canada in 2001 and, since that time, I have found myself saying at the end of each year, "Well, we won't see another year like that again."

  Content Type(s): Press, Speeches and appearances, Remarks
• December 8, 2003

  Governor Reviews Past Adjustments and Future Trends in the Canadian Economy

  Media Relations London, Ontario

  Bank of Canada Governor David Dodge today reviewed the economic adjustments that Canadians made through the 1990s and talked about the adjustments that will be necessary in coming decades.

  Content Type(s): Press, Press releases

• Why Does Private Consumption Rise After a Government Spending Shock?

  Staff Working Paper 2003-43 Hafedh Bouakez, Nooman Rebei

  Recent empirical evidence suggests that private consumption is crowded-in by government spending. This outcome violates existing macroeconomic theory, according to which the negative wealth effect brought about by a rise in public expenditure should decrease consumption.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Fiscal policy JEL Code(s): E, E3, E32, E6, E62

• A Structural VAR Approach to the Intertemporal Model of the Current Account

  Staff Working Paper 2003-42 Takashi Kano

  The intertemporal current account approach predicts that the current account of a small open economy is independent of global shocks, and that responses of the current account to country-specific shocks depend on the persistence of the shocks. The author shows that these predictions impose cross-equation restrictions (CERS) on a structural vector autoregression (SVAR).

  Content Type(s): Staff research, Staff working papers Topic(s): Balance of payments and components, Monetary aggregates JEL Code(s): F, F3, F32, F4, F41

• Anatomy of a Twin Crisis

  Staff Working Paper 2003-41 Raphael Solomon

  The author presents a model of a twin crisis, in which foreign and domestic residents play a banking game. Both "honest" and run equilibria of the post-deposit subgame exist; some run equilibria lead to a currency crisis, as agents convert domestic currency to foreign currency.

  Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Financial institutions JEL Code(s): E, E5, E58, F, F3, F30, G, G2, G21