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
Poignée de main invisible et persistance des cycles économiques : une revue de la littérature Staff Working Paper 2003-40 Christian Calmès The author explains how self-enforcing labour contracts can enhance the performance of macroeconomic models. He exposes the benefits of using these dynamic contracts to account for some puzzling macroeconomic facts regarding the dynamics and persistence of employment, consumption and output. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): E, E1, E12, E4, E49, J, J3, J30, J31, J4, J41
Alternative Targeting Regimes, Transmission Lags, and the Exchange Rate Channel Staff Working Paper 2003-39 Jean-Paul Lam Using a closed-economy model, Jensen (2002) and Walsh (2003) have, respectively, shown that a policy regime that optimally targets nominal income growth (NIT) or the change in the output gap (SLT) outperforms a regime that targets inflation, because NIT and SLT induce more inertia in the actions of the central bank, effectively replicating the outcome obtained under precommitment. The author obtains a very different result when the analysis is extended to open-economy models. Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Monetary policy framework JEL Code(s): E, E5, E52, E58
Simple Monetary Policy Rules in an Open-Economy, Limited-Participation Model Staff Working Paper 2003-38 Scott Hendry, Wai-Ming Ho, Kevin Moran The authors assess the stabilization properties of simple monetary policy rules within the context of a small open-economy model constructed around the limited-participation assumption and calibrated to salient features of the Canadian economy. By relying on limited participation as the main nominal friction that affects the artificial economy, the authors provide an important check of the robustness of the results obtained using alternative environments in the literature on monetary policy rules, most notably the now-standard "New Keynesian" paradigm that emphasizes rigidities in the price-setting mechanism. Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy framework, Monetary policy transmission JEL Code(s): E, E4, E44, E5, E52, E58, F, F3, F31