Le PIB potentiel des États-Unis et ses déterminants : la productivité de la main-d'oeuvre et le taux d'activité Staff Working Paper 1998-13 René Lalonde This study has three main objectives: first, to determine whether the good performance of the U.S. economy observed in recent years is attributable to an upsurge in potential GDP; second, to identify the variables related to aggregate supply, whose trend might explain the evolution in economic potential; finally, to observe whether, despite everything, the American […] Content Type(s): Staff research, Staff working papers
Un examen de la crédibilité de la politique monétaire au Canada Staff Working Paper 1998-12 Patrick Perrier In this study, the author uses survey data on inflationary expectations to obtain information about the credibility of Canada's monetary policy. By comparing the differences between the forecasts made by survey participants with the targets set by the Bank of Canada for the 1992-1996 period (the period covered by the study), it was possible to […] Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets JEL Code(s): E, E5, E52
Liquidity Effects and Market Frictions Staff Working Paper 1998-11 Scott Hendry, Guang-Jia Zhang The goal of this paper is to shed light on the nature of the monetary transmission mechanism. Specifically, we attempt to tackle two problems in standard limited-participation models: (1) the interest rate liquidity effect is not as persistent as in the data; and (2) some nominal variables are unrealistically volatile. To address these problems, we […] Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy transmission JEL Code(s): E, E5
Fundamentals, Contagion and Currency Crises: An Empirical Analysis Staff Working Paper 1998-10 Mark Kruger, Patrick Osakwe, Jennifer Page This paper examines the determinants of currency crises in Latin America, Asia and Africa. It asks two basic questions: (a) Are currency crises linked to economic fundamentals? and; (b) Is there any evidence of a contagion effect after controlling for the potential effects of economic fundamentals? Using pooled annual data for 19 developing countries spanning […] Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates JEL Code(s): F, F3
Buying Back Government Bonds: Mechanics and Other Considerations Staff Working Paper 1998-9 Toni Gravelle With the elimination of the federal deficit, the Bank of Canada, the Department of Finance, and financial market participants are examining ways to manage the reduction in the stock of marketable debt. This paper summarizes three different methods—reverse auction, over-the-counter purchases, and conversions—that could be used to buy back Government of Canada bonds before they […] Content Type(s): Staff research, Staff working papers Topic(s): Debt management, Financial markets JEL Code(s): G, G1
Easing Restrictions on the Stripping and Reconstitution of Government of Canada Bonds Staff Working Paper 1998-8 David Bolder, Serge Boisvert The Department of Finance and the Bank of Canada, as its fiscal agent, work closely with financial market participants in the management of the federal government's debt program. From the government's perspective, maintaining a liquid well-functioning market in Government of Canada securities is a key factor in ensuring that debt-service costs are minimized. It is […] Content Type(s): Staff research, Staff working papers Topic(s): Debt management JEL Code(s): G, G1
Uncertainty and Multiple Paradigms of the Transmission Mechanism Staff Working Paper 1998-7 Walter Engert, Jack Selody An important challenge facing central banks is making decisions under uncertainty about the dynamic effects of monetary policy actions. The authors stress the importance of explicitly recognizing uncertainty about the transmission mechanism when formulating policy advice. They argue that one way to manage monetary policy under uncertainty is to draw on both an output-gap paradigm […] Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy and uncertainty, Monetary policy framework JEL Code(s): E, E5
Forecasting Inflation with the M1-VECM: Part Two Staff Working Paper 1998-6 Walter Engert, Scott Hendry A central bank's main concern is the general direction of future inflation, and not transitory fluctuations of the inflation rate. As a result, this paper is concerned with forecasting a simple measure of the trend of inflation, the eight-quarter CPI-inflation rate. The primary objective is to improve the M1-based vector-error-correction model (VECM) developed by Hendry […] Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Inflation and prices, Monetary aggregates JEL Code(s): C, C3, C5, E, E3, E4, E5
Predicting Canadian Recessions Using Financial Variables: A Probit Approach Staff Working Paper 1998-5 Joseph Atta-Mensah, Greg Tkacz This paper examines the ability of a number of financial variables to predict Canadian recessions. Regarding methodology, we follow closely the technique employed by Estrella and Mishkin (1998), who use a probit model to predict U.S. recessions up to eight quarters in advance. Our main finding is that the spread between the yield on Canadian […] Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Interest rates JEL Code(s): E, E3, E32, E4, E43
The Benefits of Low Inflation: Taking Stock Technical Report No. 83 Brian O'Reilly This paper surveys the empirical literature on the benefits of low inflation, emphasizing contributions since 1990. It follows the framework of a section in the Bank's 1990 Annual Report, "The benefits of price stability." Content Type(s): Staff research, Technical reports Topic(s): Inflation: costs and benefits JEL Code(s): E, E3