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172
result(s)
June 16, 2006
Global Imbalances—Just How Dangerous?
The combination of rising current account surpluses in Asia and a growing current account deficit in the United States has raised concerns that the resulting imbalances pose a threat to the world economy, especially if they are reversed in a disorderly manner. Some experts believe that normal market forces will resolve these imbalances over time; others argue that policy-makers should facilitate the adjustment with policies that curb domestic demand in deficit countries and stimulate it in surplus countries. Little and Lafrance provide a guide to the major issues and controversies involved in the debate.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Balance of payments and components,
Exchange rates,
International topics
The Welfare Implications of Inflation versus Price-Level Targeting in a Two-Sector, Small Open Economy
Staff Working Paper 2006-12
Eva Ortega,
Nooman Rebei
The authors analyze the welfare implications of simple monetary policy rules in the context of an estimated model of a small open economy for Canada with traded and non-traded goods, and with sticky prices and wages.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Economic models,
Exchange rates,
Inflation targets
JEL Code(s):
E,
E3,
E31,
E32,
E5,
E52
A Structural Error-Correction Model of Best Prices and Depths in the Foreign Exchange Limit Order Market
Staff Working Paper 2006-8
Ingrid Lo,
Stephen Sapp
Traders using the electronic limit order book in the foreign exchange market can watch the posted price and depth of the best quotes change over the day.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Exchange rates,
Financial markets
JEL Code(s):
C,
C3,
D,
D8,
F,
F3,
F31
December 22, 2005
70 Years of Central Banking: The Bank of Canada in an International Context, 1935–2005
Bordo and Redish examine the evolution of central banking over the past 70 years and identify periods where Canada was either a notable innovator with regard to central banking practices or appeared to be following a slightly different course. They note that global forces seemed to play an important role in determining inflation outcomes throughout the 70-year period, and that Canada and the United States experienced roughly similar inflation rates despite some important differences in their monetary policy regimes. Canada, for example, was comparatively late in establishing a central bank, launching the Bank of Canada long after most other industrial countries had one. Canada also operated under a flexible exchange rate through much of the Bretton Woods period, unlike any other country in the 1950s and early 1960s; adopted inflation targets well before most other central banks; and introduced a number of other innovative changes with regard to the implementation of monetary policy in the 1990s.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Exchange rates,
Inflation and prices,
Monetary policy framework
Order Submission: The Choice between Limit and Market Orders
Staff Working Paper 2005-42
Ingrid Lo,
Stephen Sapp
Most financial markets allow investors to submit both limit and market orders, but it is not always clear what affects the choice of order type.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Exchange rates,
Financial institutions,
Market structure and pricing
JEL Code(s):
D,
D4,
G,
G1
The Exchange Rate and Canadian Inflation Targeting
Staff Working Paper 2005-34
Christopher Ragan
The author provides a non-technical explanation of the role played by the exchange rate in Canada's inflation-targeting monetary policy.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Exchange rates,
Inflation targets,
Monetary policy implementation
JEL Code(s):
E,
E5,
E50,
E52,
F,
F4,
F41
October 25, 2005
Exports, Imports, and the Appreciation of the Canadian Dollar
An objective assessment of the effects of the appreciation of the Canadian dollar in 2003 and 2004 on exports and imports requires a detailed review of the numerous other factors which may have been at play. Dion, Laurence, and Zheng discuss the influences that have affected Canada's international trade over the past two years, including exchange rate movements, global and sector-specific shocks, constraints on the domestic supply of a few products, and competition from emerging economies, most notably, China. The analysis is complemented with econometric models developed at the Bank which provide statistically valid estimates of the contribution of the Canadian-dollar appreciation to the recent developments in exports and imports.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Balance of payments and components,
Exchange rates,
International topics
October 22, 2005
How the Appreciation of the Canadian Dollar Has Affected Canadian Firms: Evidence from the Bank of Canada Business Outlook Survey
To track how firms were affected by the appreciation of the Canadian dollar in 2003 and 2004 and the steps they took in response, the Bank included supplementary questions in the quarterly Business Outlook Survey conducted by its regional offices. About half of the firms surveyed reported being adversely affected, one-quarter experienced a favourable impact, and the remainder reported no effect. Jean Mair classifies and summarizes the firms' responses, identifying the sectors that were most and least affected. Causes of the impacts are identified, as well as the actions firms took as a result of the appreciation. The article looks at these actions over time to see what they tell us about firms' adjustment process.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Balance of payments and components,
Exchange rates,
Recent economic and financial developments
October 18, 2005
What Drives Movements in Exchange Rates?
Understanding what causes the exchange rate to move has been on ongoing challenge for economists. Despite extensive research, traditional macro models of exchange rate determination—with the exception of the Bank of Canada's exchange rate equation—have typically not fared well, motivating economists to explore new ways to model exchange rate movements that incorporate more complex and realistic settings. Within the context of the sharp appreciation of the Canadian dollar in 2003 and 2004, Bailliu and King review the macroeconomic models of exchange rates, as well as the micro-structure studies that highlight the importance of trading mechanisms, information asymmetry, and investor heterogeneity for explaining short-term dynamics in exchange rates. In addition to summarizing the current state of knowledge, they highlight recent advances and identify promising alternative approaches.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Economic models,
Exchange rates,
Financial markets