June 22, 2005
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2334
result(s)
June 18, 2005
Recent Trends in Canadian Defined-Benefit Pension Sector Investment and Risk Management
Defined-benefit (DB) pension plans account for the majority of employer pension fund assets. In recent years, a number of DB plans have become underfunded, in sharp contrast to the 1990s, when many plans had large actuarial surpluses. The deterioration in the financial health of DB plans has underscored various longer-term structural issues that could make it increasingly difficult for plan sponsors to manage the financial risks of these plans. Tuer and Woodman examine how funding deficits, a greater focus on plan liabilities, a low yield environment, and changing investment beliefs are influencing investment decisions in the Canadian DB pension sector. They review the funding of DB plans, changing views on the equity-risk premium, and the shift towards liability-centred approaches to investment and how these developments are affecting pension sector investment. They also consider additional influences on the pension sector, including the limited supply of long-term bonds, the elimination of the foreign-property rule, and the movement towards fair-value accounting and a financial-economics approach to actuarial valuation, as well as their implications for financial markets.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Financial institutions,
Recent economic and financial developments
Lines of Credit and Consumption Smoothing: The Choice between Credit Cards and Home Equity Lines of Credit
Staff Working Paper 2005-18
Shubhasis Dey
The author models the choice between credit cards and home equity lines of credit (HELOCs) within a framework where consumers hold lines of credit as instruments of consumption smoothing across state and time.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Credit and credit aggregates
JEL Code(s):
D,
D1,
D8,
D81
Risk Perceptions and Attitudes
Staff Working Paper 2005-17
Miroslav Misina
Changes in risk perception have been used in various contexts to explain shorter-term developments in financial markets, as part of a mechanism that amplifies fluctuations in financial markets, as well as in accounts of "irrational exuberance."
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Economic models,
Financial markets
JEL Code(s):
D,
D8,
D81,
D84,
G,
G1,
G12
Endogenous Central Bank Credibility in a Small Forward-Looking Model of the U.S. Economy
Staff Working Paper 2005-16
René Lalonde
The linkages between inflation and the economy's cyclical position are thought to be strongly affected by the credibility of monetary authorities.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Econometric and statistical methods,
Inflation and prices,
Monetary policy transmission
JEL Code(s):
C,
C3,
C32,
E,
E5,
E52
Learning-by-Doing or Habit Formation?
Staff Working Paper 2005-15
Hafedh Bouakez,
Takashi Kano
In a recent paper, Chang, Gomes, and Schorfheide (2002) extend the standard real business cycle (RBC) model to allow for a learning-by-doing (LBD) mechanism whereby current labour supply affects future productivity.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Econometric and statistical methods,
Economic models,
Labour markets
JEL Code(s):
C,
C5,
C52,
E,
E3,
E32,
J,
J2,
J22
Labour Market Adjustments to Exchange Rate Fluctuations: Evidence from Canadian Manufacturing Industries
Staff Working Paper 2005-14
Danny Leung,
Terence Yuen
The authors provide some of the first empirical evidence on labour market adjustments to exchange rate movements in Canadian manufacturing industries.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Exchange rates,
Labour markets
JEL Code(s):
E,
E2,
E23,
F,
F4
Efficiency and Economies of Scale of Large Canadian Banks
Staff Working Paper 2005-13
Jason Allen,
Ying Liu
The authors measure the economies of scale of Canada's six largest banks and their costefficiency over time. Using a unique panel data set from 1983 to 2003, they estimate pooled translog cost functions and derive measures of relative efficiency and economies of scale.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Financial institutions
JEL Code(s):
C,
C3,
C33,
D,
D2,
D24,
G,
G2,
G21
April 25, 2005
Understanding China's Long-Run Growth Process and Its Implications for Canada
In the past 25 years, China has introduced numerous reforms, gradually moving from a centrally planned economy towards a socialist market economy capable of robust and sustainable economic growth. China's increasing integration into the global economy, which has been fuelled by this recent and rapid economic growth, has already begun to affect the economies of other countries and to present challenges for policy-makers, both in China and abroad. In addition to examining the determinants of China's past and current growth, the authors consider factors that are likely to support continued growth in the future and assess the implications for both the world and the Canadian economies.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Development economics,
International topics
April 22, 2005
Borders, Common Currencies, Trade, and Welfare: What Can We Learn from the Evidence?
Recent evidence indicates that the intensity of economic exchange within and across borders is significantly different: linkages are much tighter within, than among, nation-states. These findings, however, do not necessarily imply that borders and separate national currencies represent significant barriers to trade that should be removed, since the evidence is also consistent with the alternative hypothesis, that domestic exchange is more efficient because domestic producers are better able to satisfy the requirements of local consumers, owing to common tastes and institutions and the existence of local information and social networks. Focusing primarily on trade linkages within and between Canada and the United States, the authors review the evidence on the extent to which national borders lessen the intensity of international economic linkages, primarily trade in goods and services, and the effects on domestic welfare. They also examine the evidence on the impact of common currencies on trade and welfare. They determine that, since the empirical models employed to date in this research cannot distinguish between alternative explanations of the evidence, it is not yet possible to draw firm conclusions for policy-making.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Exchange rate regimes,
International topics,
Monetary policy framework