Publications

• August 18, 2011

  Bank of Canada Review - Summer 2011

  

  This special issue, “Real-Financial Linkages,” examines the Bank’s research using theoretical and empirical models to improve its understanding of the linkages between financial and macroeconomic developments in the wake of the recent global financial crisis.

  Content Type(s): Publications, Bank of Canada Review
• August 18, 2011

  Introducing Multiple Interest rates in ToTEM

  Bank of Canada Review - Summer 2011 José Dorich, Rhys R. Mendes, Yang Zhang

  This article describes changes to the structure of ToTEM—the Bank of Canada’s main model for projection and policy analysis—that allow an independent role for long-term interest rates, as well as for the risk spreads that lead to differences in the interest rates faced by households, firms and the government. These changes broaden the range of policy questions that the model can address and improve its ability to explain data. The authors use the model to simulate the effects of shocks to the risk spreads on interest rates similar to those that occurred during the recent financial crisis. They also use the model to assess the macroeconomic impact of higher requirements for bank capital and liquidity.

  Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Economic models, Financial system regulation and policies, Interest rates
• August 18, 2011

  The BoC-GEM-Fin: Banking in the Global Economy

  Bank of Canada Review - Summer 2011 Carlos De Resende, René Lalonde

  This article describes the Bank of Canada’s version of the Global Economy Model structured to incorporate an active banking system that features an interbank market and cross-border lending. After describing the new model, the authors use it to examine the responses of selected U.S. and Canadian macroeconomic variables to a “credit crunch” in the United States and also to study the impact of changes in the regulatory limits to bank leverage in Canada. They also discuss the relative merits of a monetary policy framework based on inflation targeting and one based on price-level targeting in the presence of shocks to the U.S. and Canadian banking sectors.

  Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Economic models, Financial institutions, Financial system regulation and policies, Monetary policy framework
• August 18, 2011

  Bank Balance Sheets, Deleveraging and the Transmission Mechanism

  Bank of Canada Review - Summer 2011 Césaire Meh

  The author investigates the influence of bank capital on economic activity, using a macroeconomic model that incorporates an explicit role for financial intermediation. The analysis focuses on the role of a “bank-capital channel” in propagating and amplifying monetary policy actions and other shocks. The question of whether weaker bank balance sheets make the economy more vulnerable to adverse shocks is examined, together with the impact of initiatives, such as countercyclical capital buffers, on the transmission of monetary policy and other shocks to the real economy.

  Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Economic models, Financial institutions, Financial system regulation and policies, Monetary policy transmission
• August 18, 2011

  Mortgage Debt and Procyclicality in the Housing Market

  Bank of Canada Review - Summer 2011 Ian Christensen

  This article focuses on the role that loans backed by housing collateral play in amplifying housing booms and, more generally, procyclicality in the housing market. The author uses a model developed to include borrower and lender households, as well as a housing market, to examine the impact that altering the loan-to-value ratio (either permanently or countercyclically) might have on the volatility of house prices and mortgage debt.

  Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Economic models, Financial system regulation and policies, Market structure and pricing
• August 18, 2011

  Developing a Medium-Term Debt-Management Strategy for the Government of Canada

  Bank of Canada Review - Summer 2011 Marc Larson, Étienne Lessard

  As the Government of Canada’s fiscal agent, the Bank of Canada provides strategic policy advice on the management of the government’s debt, in addition to being responsible for conducting debt-management operations. In this article, the authors review the evolution of the debt strategy over the past 20 years and outline the complex process of developing a sound strategy that balances various cost and risk considerations. This includes an examination of the tools and practices used to develop the new medium-term debt-management strategy, such as the modelling approach involved, market consultations and various debt-management metrics.

  Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Debt management, Economic models
• July 20, 2011

  Monetary Policy Report – July 2011

  

  The Canadian economy is projected to expand by 2.8 per cent in 2011, 2.6 per cent in 2012, and 2.1 per cent in 2013, returning to capacity in the middle of 2012. Total CPI inflation is expected to return to the 2 per cent target by the middle of 2012.

  Content Type(s): Publications, Monetary Policy Report
• July 11, 2011

  Senior Loan Officer Survey - Second-Quarter 2011

  The survey results point to an overall net easing in business-lending conditions. The balance of opinion regarding both price and non-price lending conditions showed the greatest degree of consensus on easing since the survey began in 1999.

  Content Type(s): Publications, Senior Loan Officer Survey
• July 11, 2011

  Business Outlook Survey - Summer 2011

  Businesses remain positive about the outlook for the next 12 months, despite more modest expectations for U.S. economic growth. Indicators of future sales and investment are moderately higher, and intentions to hire have become more widespread.

  Content Type(s): Publications, Business Outlook Survey
• June 22, 2011

  Emerging from the Shadows: Market-Based Financing in Canada

  Financial System Review - June 2011 James Chapman, Lawrence L. Schembri, Stéphane Lavoie

  Content Type(s): Publications, Financial System Review articles