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2373
result(s)
November 13, 2014
Recent Developments in Experimental Macroeconomics
This article describes experimental economics, in general, and new developments in experimental macroeconomics, in particular. The approach has a clear niche in providing evidence on economic phenomena that cannot be observed directly or that are difficult to measure. Experimental work conducted by Bank of Canada economists has shed light on a number of issues important to monetary policy, such as the relative efficacy between price-level and inflation targeting, and the nature of inflation expectations formation.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Inflation and prices,
Monetary policy framework
JEL Code(s):
C,
C9,
E,
E3,
E31,
E5,
E52
November 13, 2014
Should Forward Guidance Be Backward-Looking?
When constrained by the zero lower bound, some central banks have communicated a threshold that must be met before short-term interest rates would be permitted to rise. Simulation results for Canada show that forward guidance that is conditional on achieving a price-level threshold can theoretically raise demand and inflation expectations by significantly more than unemployment thresholds. This superior performance is attributable to the fact that the price-level threshold depends on past inflation outcomes. In practice, however, history-dependent thresholds such as this might be more challenging for central banks to communicate.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Business fluctuations and cycles,
Monetary policy framework
JEL Code(s):
E,
E5,
E52,
E58
November 13, 2014
Spillover Effects of Quantitative Easing on Emerging-Market Economies
While quantitative easing (QE) in the United States likely increased capital flows to emerging-market economies (EMEs), putting upward pressure on asset prices and exchange rates, diverging fundamentals between advanced economies and EMEs were also important drivers. Evidence suggests that the benefits of QE to EMEs, in higher global demand and increased confidence, appear to outweigh the costs. When advanced economies begin to normalize monetary policy, the best defence for EMEs against any potential instability is likely to be further strengthening of their macroeconomic and financial policy frameworks.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
International financial markets,
International topics,
Monetary policy transmission
JEL Code(s):
E,
E5,
E52,
E58,
F,
F3,
F32,
F4,
F41,
F42
November 13, 2014
Firm Strategy, Competitiveness and Productivity: The Case for Canada
At a time when the Bank is expecting a rotation of demand toward exports and investment, and transformative global trends are placing increasing emphasis on innovation, technology and organizational learning, an understanding of the competitiveness strategies of Canadian firms and the factors affecting them has become particularly relevant. This article summarizes findings from a Bank of Canada survey of 151 firms designed to extract signals on elements of firm strategy and organizational capital in order to help inform the macroeconomic outlook.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Business fluctuations and cycles,
Monetary policy and uncertainty,
Potential output,
Productivity
JEL Code(s):
D,
D2,
D23,
D24,
E,
E2,
E22,
F,
F2,
F20,
L,
L1,
L10,
L2,
L20,
M,
M1,
M10,
O,
O3,
O31,
O4,
O47
November 13, 2014
The Use of Financial Derivatives by Canadian Firms
In Canada, about one-third of publicly listed non-financial firms use financial derivatives. The use of derivatives is widespread across all sectors of the economy and increases during periods of greater uncertainty. Non-financial firms that use derivatives are typically larger and more profitable and have lower volatility of earnings than those that do not use derivatives. Overall, the firm characteristics of Canadian hedgers seem to be consistent with those found in other jurisdictions.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Exchange rates,
Financial markets
JEL Code(s):
G,
G1,
G10,
G3,
G32
Credit Market Frictions and Sudden Stops
Staff Working Paper 2014-49
Yuko Imura
Financial crises in emerging economies in the 1980s and 1990s often entailed abrupt declines in foreign capital inflows, improvements in trade balance, and large declines in output and total factor productivity (TFP).
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Credit and credit aggregates,
Financial markets,
International topics
JEL Code(s):
E,
E2,
E22,
E3,
E32,
F,
F4,
F41,
G,
G0,
G01
The Propagation of Industrial Business Cycles
Staff Working Paper 2014-48
Maximo Camacho,
Danilo Leiva-Leon
This paper examines the business cycle linkages that propagate industry-specific business cycle shocks throughout the economy in a way that (sometimes) generates aggregated cycles. The transmission of sectoral business cycles is modelled through a multivariate Markov-switching model, which is estimated by Gibbs sampling.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Domestic demand and components,
Econometric and statistical methods
JEL Code(s):
C,
C2,
C22,
E,
E2,
E27,
E3,
E32
Labour Share Fluctuations in Emerging Markets: The Role of the Cost of Borrowing
Staff Working Paper 2014-47
Serdar Kabaca
This paper contributes to the literature by documenting labour income share fluctuations in emerging-market economies and proposing an explanation for them. Time-series data indicate that emerging markets differ from developed markets in terms of changes in the labour share over the business cycle.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Development economics,
Interest rates,
International topics,
Labour markets
JEL Code(s):
E,
E2,
E25,
E4,
E44,
F,
F4,
F41
Are There Gains from Pooling Real-Time Oil Price Forecasts?
Staff Working Paper 2014-46
Christiane Baumeister,
Lutz Kilian,
Thomas K. Lee
The answer as to whether there are gains from pooling real-time oil price forecasts depends on the objective. The approach of combining five of the leading forecasting models with equal weights dominates the strategy of selecting one model and using it for all horizons up to two years.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Econometric and statistical methods,
International topics
JEL Code(s):
C,
C5,
C53,
Q,
Q4,
Q43