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May 6, 2020

Annual Report 2019

The Annual Report outlines the Bank’s activities and achievements in 2019. It includes the financial statements and a message from Governor Stephen S. Poloz.
Content Type(s): Publications, Annual Report
November 19, 2002

Purchasing-Power Parity: Definition, Measurement, and Interpretation

This article examines the concept of purchasing-power parity (PPP) and its implications for the equilibrium value of the Canadian exchange rate. PPP has two main applications, as a theory of exchange rate determination and as a means to compare living standards across countries. Concerning exchange rate determination, PPP is mainly useful as a reminder that monetary policy has no long-run impact on the real exchange rate, since the exchange rate can deviate persistently from its PPP value in response to real shocks. To compare living standards across countries, PPP exchange rates constructed by comparing the prices of national consumption baskets are used to translate per capita national incomes into a common currency. These rates are useful because they offset differences in national price levels to obtain comparable measures of purchasing power, but they are not an accurate measure of the equilibrium value of the exchange rate. The authors conclude that the current deviation of the Canadian exchange rate from the PPP rate does not imply that the exchange rate is undervalued, but that this deviation reflects the impact of persistent real factors, in particular, lower commodity prices.
September 27, 2019

Joint Macroeconomic Workshop in Tokyo

The Bank of Canada, together with the Bank of Japan and the Federal Reserve Bank of Philadelphia, held the first joint workshop on macroeconomic issues for central banks. Participants discussed household inequality, labour-market dynamics, and monetary and fiscal policy.
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