Subscribe to Publications
Publications



  • August 19, 2002

    Models in Policy-Making

    Bank of Canada Review - Summer 2002 Donald Coletti, Stephen Murchison
    This article examines another strategy in the Bank's approach to dealing with an uncertain world: the use of carefully articulated models to produce economic forecasts and to examine the implications of the various risks to those forecasts. Economic models are deliberate simplifications of a complex world that allow economists to make predictions that are reasonably accurate and that can be easily understood and communicated. By using several models, based on competing paradigms, the Bank minimizes policy errors that could result from relying on one view of the world and one philosophy of model design. The authors review some of the models currently used at the Bank, as well as the role of judgment in the projection process.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Economic models
  • August 18, 2002

    The Role of Simple Rules in the Conduct of Canadian Monetary Policy

    Bank of Canada Review - Summer 2002 Denise Côté, Jean-Paul Lam, Ying Liu, Pierre St-Amant
    The third strategy employed by the Bank when dealing with uncertainty is the consideration of appropriate simple reaction functions or "rules" for the setting of the policy interest rate. Since John Taylor's presentation of his much-discussed rule, research on simple policy rules has exploded. Simple rules have several advantages. In particular, they are easy to construct and communicate and are believed by some to be robust, in the sense of generating good results in a variety of economic models. This article provides an overview of the recent research regarding the usefulness and robustness of simple monetary policy rules, particularly in models of the Canadian economy. It also describes and explains the role of simple rules in the conduct of monetary policy in Canada.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary policy and uncertainty
  • May 21, 2002

    Inflation and the Macroeconomy: Changes from the 1980s to the 1990s

    Bank of Canada Review - Spring 2002 David Longworth
    Over the last 10 years, the level of inflation has been much lower than in the previous two decades. At the same time, the behaviour of inflation has changed profoundly. By surveying the data and the economic research, the author first examines changes in the variability, growth rates, and behaviour of some of the major macroeconomic variables during the 1980s and 1990s. He then looks at how these changes are linked to a shift in the approach of monetary policy over the period. Lastly, he reviews the economic benefits that these changes have had for Canada.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Business fluctuations and cycles, Credibility, Inflation targets, Inflation: costs and benefits
  • May 21, 2002

    Bank of Canada Review - Spring 2002

    BoC Review - Spring 2002

    Cover page

    Japanese Hansatsu

    The notes on the cover range in value from 5 ryo to 50 mon and date from the late eighteenth century to the mid-nineteenth century. The largest measures 5.5 by 16.8 centimetres. All four pieces are part of the National Currency Collection, Bank of Canada.

    Photography by James Zagon, Ottawa.
    Content Type(s): Publications, Bank of Canada Review
  • May 20, 2002

    Trends in Productivity Growth in Canada

    Bank of Canada Review - Spring 2002 Allan Crawford
    This article describes the major trends in the growth of labour productivity in Canada since the early 1960s and summarizes our current knowledge about the causes of the historical patterns. Particular attention is given to the period since the mid-1990s during which productivity growth has been significantly higher in the United States than in Canada. The author reviews the empirical evidence on the contribution of information and communication technology to the recent difference between Canadian and U.S. rates of productivity growth. Other determinants of a country's productivity performance, such as human capital formation and openness to international trade, are also examined. The article concludes with an assessment of the prospects for an increase in the trend rate of productivity growth in Canada over the coming years.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Productivity
  • May 19, 2002

    Private Capital Flows to Emerging-Market Economies

    Bank of Canada Review - Spring 2002 Jean-François Perrault
    This article explores the evolution of capital flows to emerging markets over the last 30 years with emphasis on the past decade. Capital markets in emerging-market economies have evolved substantially over the period, becoming increasingly deep and resilient. The author looks at how capital flows to these countries have changed in terms of magnitude, geographical distribution, the financial instruments used, and the country of origin. He also examines how changes in the investor base have affected these flows and reviews the factors underlying the growth of private capital flows in the 1990s.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Development economics
  • May 18, 2002

    Foreign Takeovers and the Canadian Dollar: Evidence and Implications

    Bank of Canada Review - Spring 2002 Lawrence L. Schembri
    Since 1995, acquisitions of foreign firms by Canadian residents and acquisitions of Canadian firms by foreign residents have increased. Through most of this period, the dollar has depreciated, but the cumulative net balance of foreign direct investment acquisition flows has remained close to zero. The recent upward trend in bilateral acquisition flows is part of the globalization process as firms consolidate and rationalize their operations, and is not related to the value of the Canadian dollar. Standard models of international asset pricing imply that there should not be a relationship between the Canadian exchange rate and foreign takeovers of Canadian firms because an exchange rate movement does not give foreign buyers a systematic advantage over domestic buyers. Purchases of domestic firms by foreign residents are likely to be welfare-improving. Transactions between foreign and domestic residents are voluntary, and they imply that the foreign buyers expect to obtain higher profits from the firms' assets.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rates
Go To Page