November 13, 2014 Should Forward Guidance Be Backward-Looking? Bank of Canada Review - Autumn 2014 Rhys R. Mendes, Stephen Murchison 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 Bank of Canada Review - Autumn 2014 Robert Lavigne, Subrata Sarker, Garima Vasishtha 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 Bank of Canada Review - Autumn 2014 Lori Rennison, Farid Novin, Matthieu Verstraete 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 Bank of Canada Review - Autumn 2014 Teodora Paligorova, Rhonda Staskow 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
November 7, 2014 Weekly Financial Statistics - 7 November 2014 Content Type(s): Publications, Historical: Weekly Financial Statistics
October 31, 2014 Weekly Financial Statistics - 31 October 2014 Content Type(s): Publications, Historical: Weekly Financial Statistics
October 30, 2014 Banking and Financial Statistics - October 2014 Content Type(s): Publications, Historical: Banking and Financial Statistics
October 24, 2014 Weekly Financial Statistics - 24 October 2014 Content Type(s): Publications, Historical: Weekly Financial Statistics
October 22, 2014 Monetary Policy Report – October 2014 Real GDP growth is projected to average around 2 1/2 per cent over the next year before slowing to around 2 per cent in 2016. Content Type(s): Publications, Monetary Policy Report
October 17, 2014 Weekly Financial Statistics - 17 October 2014 Content Type(s): Publications, Historical: Weekly Financial Statistics