Recent economic and financial developments

• December 14, 1997

  Recent economic and financial developments

  Bank of Canada Review - Winter 1997-1998

  The Canadian economy expanded at an average rate of over 4 per cent through the second half of 1996 and the first three quarters of 1997. The expansion was supported by accommodative monetary conditions, substantial employment gains, low inflation, an improved fiscal postion, and strong U.S. demand. These factors will continue to underpin a scenario of sustained growth in output and employment in the period ahead. With the situation in Asia still evolving, it is difficult to be precise about the size of its overall impact on Canada. At the same time, there have been some positive developments including stronger-than-anticipated economic performance in the United States, Mexico, and Europe and declining longer-term interest rates in most industrial countries. The core rate of inflation slipped slightly below the 1 to 3 per cent target range in the closing months of 1997. With the unwinding of some of the special factors that contributed to the decline, trend inflation is expected to move back inside the range in coming months.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Recent economic and financial developments
• November 14, 1997

  European economic and monetary union: Background and implications

  Bank of Canada Review - Autumn 1997 Chantal Dupasquier, Jocelyn Jacob

  The European Union, which currently consists of 15 states, occupies an important place among the advanced economies. The final stage of the European economic and monetary union (EMU) is scheduled to begin in January 1999 with the adoption of a common currency called the "euro." A decision on which countries will participate in the euro area in 1999 will be made next spring based in part on the achievement of the economic criteria laid out in the Maastricht Treaty. In this article, the authors, after a brief discussion of the historical background, cast some light on the institutional aspects of the EMU, on the formulation and implementation of economic policy, as well as on the internal and external effects of EMU completion. For Canada, the direct implications of the shift to the euro appear to be relatively modest, at least in the short run.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rates, International topics, Recent economic and financial developments

• Les marchés du travail régionaux : une comparaison entre le Canada et les États-Unis

  Staff Working Paper 1997-17 Mario Lefebvre

  The purpose of this study is to compare the behaviour of regional labour markets in Canada and the United States. The study shows that the degree of persistence of unemployment is significantly higher in the provinces of Canada than it is in the various American regions.

  Content Type(s): Staff research, Staff working papers Topic(s): Labour markets, Recent economic and financial developments JEL Code(s): E, E2, E24

• Lagging Productivity Growth in the Service Sector: Mismeasurement, Mismanagement or Misinformation?

  Staff Working Paper 1997-6 Dinah Maclean

  While the service sector has been growing rapidly as a share of total output, aggregate productivity growth has generally lagged behind that of the goods sector. In this report, the author assesses a range of explanations for lagging service sector productivity growth.

  Content Type(s): Staff research, Staff working papers Topic(s): Productivity, Recent economic and financial developments JEL Code(s): L, L8, L80, O, O4, O47

• The Liquidity Trap: Evidence from Japan

  Staff Working Paper 1997-4 Isabelle Weberpals

  Japanese economic activity has been stagnant since the collapse of the speculative asset-price bubble in 1990, despite highly expansionary monetary policy which has brought interest rates down to record low levels. Although several reasons have been put forward to explain the sustained weakness of the Japanese economy, none is more intriguing from the viewpoint of a central bank than the possibility that monetary policy had been largely ineffective because the Japanese economy entered a Keynesian "liquidity trap."

  Content Type(s): Staff research, Staff working papers Topic(s): International topics, Recent economic and financial developments JEL Code(s): E, E4, E42, E5, E51, E52