Why Canada Needs a Flexible Exchange Rate Staff Working Paper 1999-12 John Murray This paper explores the arguments for and against a common currency for Canada and the United States and attempts to determine whether such an arrangement would offer any significant advantages for Canada compared with the present flexible exchange rate system. The paper first reviews the theoretical arguments advanced in the economics literature in support of fixed and flexible currency arrangements. A discussion of Canada's past experience with the two exchange rate systems follows, after which there is a survey of the empirical evidence published on Canada's current and prospective suitability for some form of fixed currency arrangement with the United States. The final section of the paper examines critically a number of concerns raised about the behaviour of the current flexible exchange rate system. Content Type(s): Staff research, Staff working papers Research Topic(s): Exchange rates JEL Code(s): F, F3, F31
May 16, 2013 Bank of Canada Review - Spring 2013 This issue includes analysis of the unconventional monetary policies recently implemented by central banks, and also presents Bank research in two areas - the migration of labour between economic regions in Canada, and the asset-allocation and funding decisions for Canada’s foreign exchange reserves. Content Type(s): Publications, Bank of Canada Review
The Bank of Canada 2015 Retailer Survey on the Cost of Payment Methods: Estimation of the Total Private Cost for Large Businesses Technical Report No. 110 Valéry Dongmo Jiongo The Bank of Canada 2015 Retailer Survey on the Cost of Payment Methods faced low response rates and outliers in sample data for two of its retailer strata: chains and large independent businesses. This technical report investigates whether it is appropriate to combine these two strata to produce more accurate estimates of the total private cost to large businesses of the main payment methods. Content Type(s): Staff research, Technical reports Research Topic(s): Econometric and statistical methods JEL Code(s): C, C1, C12, C8, C83
Optimal Capital Regulation Staff Working Paper 2017-6 Stéphane Moyen, Josef Schroth We study constrained-efficient bank capital regulation in a model with market-imposed equity requirements. Banks hold equity buffers to insure against sudden loss of access to funding. However, in the model, banks choose to only partially self-insure because equity is privately costly. Content Type(s): Staff research, Staff working papers Research Topic(s): Credit and credit aggregates, Financial institutions, Financial stability, Financial system regulation and policies JEL Code(s): E, E1, E13, E3, E32, E4, E44
A Note on Central Counterparties in Repo Markets Staff Discussion Paper 2012-4 Hajime Tomura The author introduces a central counterparty (CCP) into a model of a repo market. Without the CCP, there exist multiple equilibria in the model. In one of the equilibria, a repo market emerges as bond dealers and cash investors choose to arrange repos in an over-the-counter bond market. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Financial markets, Financial stability, Payment clearing and settlement systems JEL Code(s): G, G2, G24
Understanding Inflation Dynamics: The Role of Government Expenditures Staff Working Paper 2023-30 Chang Liu, Yinxi Xie We study the impact government expenditure has on inflation. We find that changes in government expenditure account for a substantial portion of inflation variations. We also find that inflation and inflation expectations respond negatively to fiscal spending shocks, reaffirming the supply-side channel through which inflation responds to fiscal expansions. Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Fiscal policy, Inflation and prices JEL Code(s): E, E3, E6, E62, E63
Accounting for Real Exchange Rates Using Micro‐Data Staff Working Paper 2017-12 Mario J. Crucini, Anthony Landry The classical dichotomy predicts that all of the time-series variance in the aggregate real exchange rate is accounted for by non-traded goods in the consumer price index (CPI) basket because traded goods obey the Law of One Price. In stark contrast, Engel (1999) claimed the opposite: that traded goods accounted for all of the variance. Content Type(s): Staff research, Staff working papers Research Topic(s): Exchange rates, International financial markets, Trade integration JEL Code(s): F, F3
Les effets réels du cours des actions sur la consommation Staff Working Paper 2000-21 Lise Pichette During the nineties, stock prices increased remarkably. The number of households owning stocks also rose considerably. If stock market wealth has an effect on consumers' decisions, then the rise in equity prices could have contributed to the growth in consumption in recent years. Content Type(s): Staff research, Staff working papers
Vertical Bargaining and Obfuscation Staff Working Paper 2022-13 Edona Reshidi Is obscuring prices always bad for consumers? The answer depends on the market structure and on the negotiating power between manufacturers and retailers. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Market structure and pricing JEL Code(s): C, C7, C70, L, L1, L13, L4, L42
An Eclectic Approach to Estimating U.S. Potential GDP Staff Working Paper 2002-36 Marc-André Gosselin, René Lalonde The authors describe the principal results obtained from a new method applied to the estimation of potential U.S. GDP. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Econometric and statistical methods, Potential output JEL Code(s): C, C3, C32, E, E2, E23, E3, E32