Posts
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Government Debt in an Open Economy
This paper introduces the CORE model, a prototype for a new quarterly model of the Canadian economy, designed for projections and policy analysis with focus beyond the very short run. The model has a clearly defined equilibrium and explicit adjustment mechanisms, primarily through relative prices, that are dynamically stable. Overlaid on a neo-classical growth model […] -
Some Implications of International Financial Integration for Canadian Public Policy
The domestic capital markets of the major industrial countries have become more closely integrated over the last two decades, a by-product of regulatory and technological change. This paper considers some of the implications of those changes for Canadian public policy. While no profound implications are found for Canadian macroeconomic policies, which probably reflects a long […] -
Wage and Price Dynamics in Canada
This paper examines wage and price dynamics in Canada with a view towards testing the implications of a wage-price dynamics, according to which unit labour costs are determined by a wage Phillips curve while prices are set as a markup over unit labour costs. This model is compared to an alternative model in which excess […] -
Some Evidence on Hysteresis and the Costs of Disinflation in Canada
This paper addresses the following questions: How large are the output costs of disinflation in Canada? Are these costs temporary, as predicted by natural-rate models, or are they permanent, as predicted by hysteresis models? Are the costs of disinflation higher at lower rates of inflation? Are they higher when the economy is at or below […] -
February 26, 1991
Targets for Reducing Inflation
March 1991 statement announcing the renewal of the agreement. -
The Goal of Price Stability: A Review of the Issues
The basic responsibility of a central bank is to preserve the value of money—that is, to maintain stability in the general level of prices. This report pulls together the main arguments for and against price stability as the appropriate goal for monetary policy. The available evidence suggests that the benefits of price stability are many […] -
Measuring the Profitability and Effectiveness of Foreign Exchange Market Intervention: Some Canadian Evidence
When the major industrial countries decided to move to a system of managed flexible exchange rates following the collapse of the Bretton Woods system, many observers thought that this would reduce, if not eliminate, the need for official foreign exchange market intervention. During the past fifteen years, however, intervention in most countries, including Canada, has […] -
International Interest Rate Linkages and Monetary Policy: A Canadian Perspective
This paper examines the implications of increased international capital mobility and asset substitutability for domestic monetary policy in a small open economy such as Canada. Alternative definitions of international financial market integration are presented and tested in the context of two popular macro models. In the main, results suggest that interest rate relationships in Canada […] -
Regional Disparities in Wage and Unemployment Rates in Canada: A Review of Some Issues
In this report the author considers three issues relating to regional disparities in Canada. First, the size of regional disparities in unemployment and wage rates is examined together with the patterns in these disparities over time. Next, various theories related to the causes of regional disparities are reviewed, focussing on their predictions regarding regional disparities […]