November 23, 2003
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2333
result(s)
November 22, 2003
Recent Labour Market Developments in Canada
In the year and a half leading up to mid-2003, both employment and labour force participation increased at an unusually rapid pace compared to domestic economic activity. Gains in employment were unusually large, relative to output growth, compared to gains in total hours worked. This is explained by a faster rate of increase in the participation rate of the 55 and older age group, many of whom opted for part-time employment. This shift in the composition of employment contributed to a reduction in the length of the average workweek in 2002. As a result, labour input progressed at a rate that was markedly slower than for employment and more in line with its historical relationship to output growth. The authors anticipate that the 55 and older age group will continue to participate strongly in the labour force, but that as the economy rebounds and uncertainty diminishes, the cyclical component in the growth of part-time work should diminish and that of full-time employment increase. Employment growth should moderate in relation to output growth and there may be a cyclical rebound in labour productivity as total hours worked increases during the initial recovery in output growth.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Labour markets
November 21, 2003
Developments, Issues, and Initiatives in Retail Payments
Innovations in basic information technologies, in payment applications, and in the availability of global markets, as well as substantial changes in financial sector policy, have fundamentally changed how the retail payments system in Canada operates. Principally, the volume and types of electronic payments have grown, and there is increased participation by diverse groups of financial and non-financial institutions as providers of retail payment services. The resulting policy problem for payment systems is how best to benefit from efficiency gains while managing payment risks. O'Connor examines the effect of the technological and legislative changes and the initiatives developed by the public and private sectors in such areas as the market arrangements for services; customer risks and costs for settling large-value retail payments; the security of payment information and the efficiency with which it is transmitted; and the effects of differing regulatory regimes on competition among providers of retail payment services.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Financial services,
Payment clearing and settlement systems
November 20, 2003
Technical Note: Elimination of Retroactive Settlement in the ACSS
Effective 1 November 2003, the Bank of Canada abandoned its practice of backdating the results of settlement of payments through the Automated Clearing Settlement System (ACSS). It has adopted instead a system of "next-day" settlement under which the results of the settlement process will appear on the central bank's books on the day the items actually settle in the ACSS. Since July 1986, settlement of these items had occurred at noon the day after items were presented for clearing, but the results were recognized on the Bank's books the previous day, through backdating, or "retroactive" settlement. The new system should simplify the payments process and improve the reporting of settlement risk, as well as promote cost-effectiveness within the payments systems. ACSS participants have agreed among themselves to implement an interest-compensation mechanism in order to avoid imposing a float charge on their customer base.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Payment clearing and settlement systems
Excess Collateral in the LVTS: How Much is Too Much?
Staff Working Paper 2003-36
Kim McPhail,
Anastasia Vakos
The authors build a theoretical model that generates demand for collateral by Large Value Transfer System (LVTS) participants under the assumption that they minimize the cost of holding and managing collateral for LVTS purposes. The model predicts that the optimal amount of collateral held by each LVTS participant depends on the opportunity cost of collateral, the transactions costs of acquiring assets used as collateral and transferring them in and out of the LVTS, and the distribution of an LVTS participant's payment flows in the LVTS.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Financial institutions,
Payment clearing and settlement systems
JEL Code(s):
E,
E4,
E44,
G,
G2,
G21
Real Exchange Rate Persistence in Dynamic General-Equilibrium Sticky-Price Models: An Analytical Characterization
Staff Working Paper 2003-35
Hafedh Bouakez
This paper assesses analytically the ability of dynamic general-equilibrium sticky-price models to generate persistent real exchange rate fluctuations. It develops a tractable general-equilibrium model with Calvo-type price stickiness.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Economic models,
Exchange rates,
International topics
JEL Code(s):
F,
F3,
F31,
F4,
F41
Governance and Financial Fragility: Evidence from a Cross-Section of Countries
Staff Working Paper 2003-34
Michael Francis
The author explores the role of governance mechanisms as a means of reducing financial fragility. First, he develops a simple theoretical general-equilibrium model in which instability arises due to an agency problem resulting from a conflict of interest between the borrower and lender.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Financial markets
JEL Code(s):
G,
G0
Do Peer Group Members Outperform Individual Borrowers? A Test of Peer Group Lending Using Canadian Micro-Credit Data
Staff Working Paper 2003-33
Rafael Gomez,
Eric Santor
Microfinance institutions now serve over 10 million poor households in the developing and developed world, and much of their success has been attributed to their innovative use of peer group lending. There is very little empirical evidence, however, to suggest that group lending schemes offer a superior institutional design over lending programs that serve individual borrowers.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Development economics
JEL Code(s):
E,
J,
J2,
J23,
O,
O1,
O17
The Canadian Phillips Curve and Regime Shifting
Staff Working Paper 2003-32
Frédérick Demers
Phillips curves are generally estimated under the assumption of linearity and parameter constancy. Linear models of inflation, however, have recently been criticized for their poor forecasting performance.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Econometric and statistical methods,
Inflation and prices
JEL Code(s):
C,
C5,
C52,
E,
E3,
E31
A Simple Test of Simple Rules: Can They Improve How Monetary Policy is Implemented with Inflation Targets?
Staff Working Paper 2003-31
Nicholas Rowe,
David Tulk
The authors evaluate whether an assortment of simple rules could improve how the Bank of Canada implements its inflation-targeting monetary policy. They focus on measuring the correlation between the deviations of inflation from the target and the lagged deviations of rule recommendations from the actual policy interest rate.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation targets,
Monetary policy implementation
JEL Code(s):
E,
E5