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Bank of Canada Review - Autumn 2015

November 19, 2015
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In this issue, Bank researchers discuss the muted recovery from the 2007–09 financial crisis and possible causes. There are also discussions about the Bank’s new Canadian survey of household expectations, measuring both durable goods and housing prices in the CPI and how regulatory changes may affect monetary policy operating frameworks. In the final article, improvements to the management of Canada’s foreign exchange reserves are introduced.

The Bank of Canada Review is published twice a year. Articles undergo a thorough review process. The views expressed in the articles are those of the authors and do not necessarily reflect the views of the Bank.

The contents of the Review may be reproduced or quoted, provided that the authors and the publication, with its date, are specifically cited as the source.
Content Type(s): Publications, Bank of Canada Review
November 19, 2015

Is Slower Growth the New Normal in Advanced Economies?

Bank of Canada Review - Autumn 2015 Abeer Reza, Subrata Sarker
This article reviews and examines some of the main explanations for the slow growth that many advanced economies continue to experience seven years after the 2007–09 global financial crisis. Does this muted recovery reflect just a prolonged cycle in the aftermath of a financial crisis? Is it due to a structural inadequacy of demand leading to a long-lasting liquidity trap? Or is it largely supply side in nature, reflecting demographic and technological factors?
Content Type(s): Publications, Bank of Canada Review articles Topic(s): International topics, Potential output, Recent economic and financial developments JEL Code(s): F, F0, F01, F4, F43, O, O4, O40
November 19, 2015

A Survey of Consumer Expectations for Canada

Bank of Canada Review - Autumn 2015 Marc-André Gosselin, Mikael Khan
The Bank of Canada recently launched a quarterly survey to measure the expectations of Canadian households: the Canadian Survey of Consumer Expectations (CSCE). The data collected provide comprehensive information about consumer expectations for and uncertainty about inflation, the labour market and household finance. This article describes the CSCE and illustrates its potential to offer rich information about Canadian consumers for researchers and policy-makers.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Housing, Inflation and prices, Interest rates, Labour markets, Monetary policy and uncertainty JEL Code(s): D, D1, D12, D8, D84, E, E3, E31, E5, E52, J, J0
November 19, 2015

Measuring Durable Goods and Housing Prices in the CPI: An Empirical Assessment

Bank of Canada Review - Autumn 2015 Patrick Sabourin, Pierre Duguay
While the CPI is the most commonly used measure to track inflation, it is not fully consistent with a true cost-of-living index (COLI). Although the official treatment of durable goods and housing in the CPI represents an acceptable compromise in the current environment of low and stable inflation, Sabourin and Duguay suggest that it would be worthwhile to consider treating housing and durables in the same way and bringing the actual CPI closer to a COLI. This could be accomplished by employing an enhanced user-cost approach to calculate the imputed cost of the services provided by the use of durable goods or housing.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Inflation and prices JEL Code(s): E, E3, E31, E5, E52
November 19, 2015

The Effect of Regulatory Changes on Monetary Policy Implementation Frameworks

Bank of Canada Review - Autumn 2015 Meyer Aaron, Annick Demers, Sean Durr
This article provides an analysis of some recent banking regulatory initiatives that are likely to influence the activities of financial intermediaries and the effectiveness of central bank monetary policy implementation frameworks. Although the effects of individual regulations can be anticipated in most cases, the combined regulatory impact is not yet clear. Central banks should, however, be able to accommodate the effects of the emerging regulatory environment within their existing policy implementation frameworks.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial institutions, Financial markets, Financial system regulation and policies, Monetary policy implementation JEL Code(s): E, E5, E52, G, G2, G21, L, L5, L50
November 19, 2015

Recent Enhancements to the Management of Canada’s Foreign Exchange Reserves

Bank of Canada Review - Autumn 2015 Mervin Merkowsky, Eric Wolfe
As the size and complexity of the foreign exchange reserves have grown over the years, enhancements to the management framework needed to keep pace. This is a common theme for most reserve managers around the world. In Canada, the enhancements focused on governance, portfolio management, risk measurement and risk management. This article briefly describes these enhancements, why they were implemented and some of the lessons learned along the way.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Foreign reserves management, Recent economic and financial developments JEL Code(s): E, E5, E58, F, F3, F31, G, G1