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

• Real Exchange Rate Persistence in Dynamic General-Equilibrium Sticky-Price Models: An Analytical Characterization

  Staff Working Paper 2003-35 Hafedh Bouakez

  This paper assesses analytically the ability of dynamic general-equilibrium sticky-price models to generate persistent real exchange rate fluctuations. It develops a tractable general-equilibrium model with Calvo-type price stickiness.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Exchange rates, International topics JEL Code(s): F, F3, F31, F4, F41

• Nominal Rigidities and Exchange Rate Pass-Through in a Structural Model of a Small Open Economy

  Staff Working Paper 2003-29 Steve Ambler, Ali Dib, Nooman Rebei

  The authors analyze exchange rate pass-through in an estimated structural model of a small open economy that incorporates three types of nominal rigidity (wages and the prices of domestically produced and imported goods) and eight different structural shocks. The model is estimated using quarterly data from Canada and the United States.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Exchange rates, Inflation and prices, International topics JEL Code(s): F, F2, F3, F31, F33

• Explaining and Forecasting Inflation in Emerging Markets: The Case of Mexico

  Staff Working Paper 2003-17 Jeannine Bailliu, Daniel Garcés, Mark Kruger, Miguel Messmacher

  The authors apply existing inflation models that have worked well in industrialized countries to Mexico, an emerging market that has recently moved to adopt an inflation-targeting framework for monetary policy. They compare the performance of these models with a mark-up model that has been used extensively to analyze inflation in Mexico.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, International topics JEL Code(s): E, E3, E31, E37

• Modélisation et prévision du taux de change réel effectif américain

  Staff Working Paper 2003-3 René Lalonde, Patrick Sabourin

  This study describes a simple model for predicting the real U.S. exchange rate. Starting with a large number of error-correction models, the authors choose the one giving the best out-of-sample forecasts over the period 1992Q3–2002Q1.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Economic models, Exchange rates, International topics JEL Code(s): E, E1, E17, F, F3, F31, F4, F47

• Banking Crises and Contagion: Empirical Evidence

  Staff Working Paper 2003-1 Eric Santor

  Recent events, such as the East Asian, Mexican, Scandinavian, and Argentinian crises, have sparked considerable interest in exploring how shocks experienced by one country can spread vis-à-vis real and nominal links to other countries' banking systems. Given the large costs associated with banking-system failures, both economists and policy-makers are interested in predicting the onset of banking crises and assessing the likelihood of contagion during crisis events.

  Content Type(s): Staff research, Staff working papers Topic(s): International topics JEL Code(s): F, F3, F30, G, G2, G20

• The Usefulness of Consumer Confidence Indexes in the United States

  Staff Working Paper 2002-22 Brigitte Desroches, Marc-André Gosselin

  This paper assesses the usefulness of consumer confidence indexes in forecasting aggregate consumer spending in the United States.

  Content Type(s): Staff research, Staff working papers Topic(s): Domestic demand and components, Economic models, International topics JEL Code(s): D, D1, D12, E, E2, E21, E27
• December 18, 2001

  The Resolution of International Financial Crises: Private Finance and Public Funds

  Bank of Canada Review - Winter 2001–2002 Andy Haldane, Mark Kruger

  Over the past year and a half, authors Andy Haldane of the Bank of England and Mark Kruger of the Bank of Canada have been developing a framework for the resolution of international financial crises that aligns incentives for all parties in a way that deals with the crisis and preserves the integrity of the international financial system. The framework is built on principles, not rules. It attempts to be clear about the respective roles and responsibilities of the public and private sectors. A central element in shaping private sector expectations is knowledge that the official sector will behave predictably. Constraints on lending by the International Monetary Fund are a key step in that direction. They ensure that private sector involvement is a crucial part of crisis resolution, and they help encourage debtors and creditors to seek co-operative solutions to a crisis. Characterized by constraints, clarity, and orderliness, the framework has the potential to reduce the incidence and cost of financial crises.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): International topics

• The Resolution of International Financial Crises: Private Finance and Public Funds

  Staff Working Paper 2001-20 Andy Haldane, Mark Kruger

  Over the past year and a half, the Bank of England and the Bank of Canada have been developing a framework for the resolution of international financial crises that aligns incentives for all parties to deal with a crisis and preserve the integrity of the international financial system. The framework is built on principles, not rules.

  Content Type(s): Staff research, Staff working papers Topic(s): International topics JEL Code(s): F, F3, F34, F4, F42
• May 17, 2001

  Reforming the International Financial System

  Bank of Canada Review - Spring 2001 James Powell

  This article examines the efforts of the major advanced countries to strengthen the international financial system in order to avoid financial crises such as those that occurred in emerging-market economies in the 1990s. These efforts have focused on crisis prevention and crisis management. The prevention of such crises has necessitated the formation of new international groups that include emerging markets in their membership. Measures have also been taken to reduce the vulnerability of countries to such crises. These measures have centered on the need for appropriate macroeconomic policies, including the need for sustainable exchange rate regimes, sound domestic financial systems, and prudent risk management. In the area of crisis management, the International Monetary Fund (IMF) has been given access to additional resources for lending to countries that experience financial crises. The IMF has also established new lending facilities for use in such circumstances. It has also been agreed that the private sector will need to play a greater role in the management of such crises in the future.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rate regimes, International topics