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John Murray - Latest



  • December 15, 2007

    Introduction: Recent Research on Inflation Targeting

    Bank of Canada Review - Winter 2007-2008 John Murray
    The inflation targeting framework that Canada introduced in 1991 has played a significant role in the exceptional economic performance that the country has experienced in recent years. Understanding the factors that have contributed to the success of the current inflation-targeting framework, and investigating the various ways in which it might be improved in the future, are an important part of the Bank of Canada's medium-term research program.
    Content Type(s): Publications, Bank of Canada Review articles

  • The Turning Black Tide: Energy Prices and the Canadian Dollar

    Staff Working Paper 2006-29 Ramzi Issa, Robert Lafrance, John Murray
    The authors revisit the relationship between energy prices and the Canadian dollar in the Amano and van Norden (1995) equation, which shows a negative relationship such that higher real energy prices lead to a depreciation of the Canadian dollar.
    Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Exchange rates JEL Code(s): F, F3, F31
  • August 21, 2003

    Dollarization in Canada: An Update

    Bank of Canada Review - Summer 2003 John Murray, James Powell, Louis-Robert Lafleur
    The authors describe a special survey of the payment and financial-reporting practices of Canadian firms conducted by the Bank of Canada's regional offices to determine if the U.S. dollar has started to displace the Canadian dollar as a preferred unit of account. A cross-section of firms was asked what currency (or currencies) they used: (i) for quoting sales to Canadian customers, (ii) for quoting prices to foreigners, (iii) for reporting their financial results, and (iv) for quoting salaries and wages. The survey results reported here extend some earlier results reported in a previous Review article by Murray and Powell. The data indicate that, despite the dominance of the U.S. dollar in world trade and as an international standard of value, use of the U.S. dollar in Canada is very limited. The vast majority of Canadian firms price their products and keep their financial statements in Canadian dollars, and very few workers in Canada have their salaries paid in a foreign currency. The Canadian dollar is still strongly preferred for most pricing and financial-reporting activities in Canada, and there is very little evidence of "dollarization."
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rate regimes
  • December 21, 2002

    Exchange Rate Regimes in Emerging Markets

    Bank of Canada Review - Winter 2002-2003 Jeannine Bailliu, John Murray
    A series of major international financial crises in the 1990s, and the recent introduction of the euro, have renewed interest in alternative exchange rate systems. The choice of exchange rate regime is particularly relevant for emerging-market countries because other countries are perceived either as having no alternative to their current exchange rate arrangement or as highly unlikely to change. This article examines the evolution of exchange rate regimes in emerging markets over the past decade and compares the strengths and weaknesses of the various available systems. These include intermediate regimes, such as the adjustable pegged exchange rate popular throughout much of the post—war period, and the two extreme exchange rate regimes: permanently fixed or freely floating exchange rate regimes. Two recently proposed alternatives are also evaluated: the Managed Floating Plus and Baskets, Bands, and Crawling Pegs. Both try to combine the best elements of the flexible and fixed exchange rate systems, but the Managed Floating Plus is deemed to be the more promising alternative.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Development economics, Exchange rate regimes
  • November 21, 2002

    Is Canada Dollarized?

    Bank of Canada Review - Autumn 2002 John Murray, James Powell
    The sharp depreciation of the Canadian dollar and the successful launch of the euro have sparked a lively debate in Canada about the possible benefits of formally adopting the U.S. dollar as our national currency. Some observers have suggested that this debate is largely irrelevant, since Canada is already highly "dollarized." Canadian businesses and households, they assert, often use the U.S. dollar to perform standard money functions in preference to their own currency. Very little evidence has been provided, however, to support these claims. The authors review the available data with a view to drawing some tentative conclusions about the extent to which Canada has already been informally dollarized. The evidence suggests that many of the concerns that have been expressed about the imminent demise of the Canadian dollar have been misplaced. The Canadian dollar continues to be used as the principal unit of account, medium of exchange, and store of value within our borders. Moreover, there is no indication that dollarization is likely to take hold in the foreseeable future. Indeed, in many respects, the Canadian economy is less dollarized now than it was 20 years ago.
    Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rate regimes

  • International Financial Crises and Flexible Exchange Rates: Some Policy Lessons from Canada

    Technical Report No. 88 John Murray, Mark Zelmer, Zahir Antia
    This paper examines the behaviour of the Canadian dollar from 1997 to 1999 to see if there is any evidence of excess volatility or significant overshooting. A small econometric model of the exchange rate, based on market fundamentals, is presented and used to make tentative judgments about the extent to which the currency might have been systematically over- or undervalued.
    Content Type(s): Staff research, Technical reports Topic(s): Exchange rate regimes, Exchange rates JEL Code(s): F, F3, F31

  • Why Canada Needs a Flexible Exchange Rate

    Staff Working Paper 1999-12 John Murray
    This paper explores the arguments for and against a common currency for Canada and the United States and attempts to determine whether such an arrangement would offer any significant advantages for Canada compared with the present flexible exchange rate system. The paper first reviews the theoretical arguments advanced in the economics literature in support of fixed and flexible currency arrangements. A discussion of Canada's past experience with the two exchange rate systems follows, after which there is a survey of the empirical evidence published on Canada's current and prospective suitability for some form of fixed currency arrangement with the United States. The final section of the paper examines critically a number of concerns raised about the behaviour of the current flexible exchange rate system.
    Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates JEL Code(s): F, F3, F31
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