The author develops a measure of aggregate private sector wealth in Canada and examines its ability to explain aggregate consumption of non-durables and services. This wealth measure includes financial, physical and human wealth. The author measures human wealth as the expected present value of aggregate labour income, net of government expenditures, based on a discrete […]
We examine whether there is a significant relationship between government and private consumption for Canada. We derive estimating equations between the two types of consumption under both cointegration and no-cointegration assumptions.
In this study, the author examines the hypothesis of private-sector debt overhang, which suggests that households and businesses may on occasion find themselves holding too much debt and so decide to reduce it by cutting back expenditures. His aim is to determine whether this hypothesis can help explain the weakness of credit growth and the sluggishness of the recent economic recovery in Canada.
This report highlights the possible implications of the Free Trade Agreement (FTA) and the North American Free Trade Agreement (NAFTA) for Canada and Mexico. While it is still early, the initial evidence indicates that these treaties are contributing to a continental process of industrial restructuring that will contribute to higher living standards over time. The […]
June 1, 1994 Summer 1994Canada's net external indebtedness increased from $110 billion in 1980 to $313 billion in 1993, reflecting the accumulation of current account deficits over many years.
From Monetary Policy Instruments to Administered Interest Rates: The Transmission Mechanism in CanadaThe authors investigate interest-rate aspects of the transmission mechanism of monetary policy instruments in Canada, focussing on the stability of the relationships between some key interest rates and the instruments of monetary policy. To determine what shifts may have occurred in recent years, they describe movements in rate differentials, apply cointegration tests and estimate error-correction […]
The Dynamic Behaviour of Canadian Imports and the Linear-Quadratic Model: Evidence Based on the Euler EquationWe examine the ability of the simple linear-quadratic model under rational expectations to explain dynamic behaviour of aggregate Canadian imports. In contrast to authors of previous studies who examine dynamic behaviour using the LQ model, we estimate the structural parameters using the Euler equation in a limited information framework that does not require an explicit solution for the model's control variables in terms of the exogenous forcing variables.
This paper provides an extensive survey of the literature on exchange rate volatility and trade, examining both the theory that underlies the work in this area and the results of empirical studies published since 1988.
In this paper, we estimate a fully optimized BVAR model of the Canadian economy for the period 1971-87. The model is well-adapted to the features of a small open economy. We show how it can be used as an input in the monetary policy process either as a forecasting instrument or an analytical tool.
This paper examines the predictive content of the term structure of interest rates for economic activity in Canada. Recent papers for the United States and other countries find that the slope of the term structure is a very good predictor of output growth.