Monetary aggregates

• Searching for the Liquidity Effect in Canada

  Staff Working Paper 1994-12 Ben Fung, Rohit Gupta

  This paper examines the empirical evidence of the liquidity effect in Canada. In the presence of the liquidity effect, the initial impact of an unanticipated expansionary monetary policy is to lower nominal and real interest rates for a short period of time.

  Content Type(s): Staff research, Staff working papers Topic(s): Monetary aggregates
• November 8, 1994

  The demand for currency and the underground economy

  Bank of Canada Review - Autumn 1994 Thérèse Laflèche

  The underground economy in Canada has attracted increased attention over the past few years, yet there is no precise way to measure its size. Recent estimates vary between 4 per cent and 15 per cent of gross domestic product. This article provides an overview of measurement issues and recent estimates. It then focusses on the "monetary" approach to estimating the size of the underground economy. This approach is based on the assumption that the demand for bank notes provides a clue as to the size of the underground economy. The article concludes that estimates that use this approach must be viewed with considerable caution. They are based on a number of assumptions that are difficult to verify and that significantly affect the results.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary aggregates