October 14, 2007 The Effect of China on Global Prices Bank of Canada Review - Autumn 2007 Michael Francis The dramatic growth in China's exports of consumer goods such as clothing, toys, and electronics, and imports of primary commodities such as oil and metals is having major effects on global supply and demand. In examining China's role in global relative price changes, Francis finds that downward pressure on the relative prices of consumer goods is likely to persist as China's large labour supply continues its migration into manufacturing. Likewise, China's size and growth will also remain key drivers of global commodities demand for some time. Despite these forces, inflation-targeting central banks have the tools to keep inflation close to target, thus offsetting any persistent upward or downward inflationary pressure. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Inflation and prices, International topics, Recent economic and financial developments
The Direct Effect of China on Canadian Consumer Prices: An Empirical Assessment Staff Discussion Paper 2007-10 Louis Morel The author investigates the direct effect of Chinese imported goods on consumer prices in Canada. On average, over the 2001–06 period, the direct effect of consumer goods imported from China is estimated to have reduced the inflation rate by about 0.1 percentage points per year. This disinflationary effect is due to two causes: first, the […] Content Type(s): Staff research, Staff discussion papers Topic(s): Inflation and prices JEL Code(s): E, E3, E31
Gold Prices and Inflation Staff Working Paper 2007-35 Greg Tkacz Using data for 14 countries over the 1994 to 2005 period, we assess the leading indicator properties of gold at horizons ranging from 6 to 24 months. Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Inflation and prices JEL Code(s): E, E3, E31, E4, E44
Oil Price Movements and the Global Economy: A Model-Based Assessment Staff Working Paper 2007-34 Selim Elekdag, René Lalonde, Douglas Laxton, Dirk Muir, Paolo Pesenti We develop a five-region version (Canada, an oil exporter, the United States, emerging Asia and Japan plus the euro area) of the Global Economy Model (GEM) encompassing production and trade of crude oil, and use it to study the international transmission mechanism of shocks that drive oil prices. Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Inflation and prices, International topics JEL Code(s): E, E6, E66, F, F3, F32, F4, F47
Micro Foundations of Price-Setting Behaviour: Evidence from Canadian Firms Staff Working Paper 2007-31 Daniel de Munnik, Kuan Xu How do firms adjust prices in the marketplace? Do they tend to adjust prices infrequently in response to changes in market conditions? If so, why? These remain key questions in macroeconomics, particularly for central banks that work to keep inflation low and stable. Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Monetary policy transmission JEL Code(s): D, D4, D40, E, E3, E30, L, L1, L11
Does Indexation Bias the Estimated Frequency of Price Adjustment? Staff Working Paper 2007-15 Maral Kichian, Oleksiy Kryvtsov We assess the implications of price indexation for estimated frequency of price adjustment in sticky price models of business cycles. These models predominantly assume that non-reoptimized prices are indexed to lagged or average inflation. Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Economic models, Inflation and prices JEL Code(s): E, E3, E31, E37
Survey-Based Estimates of the Term Structure of Expected U.S. Inflation Staff Working Paper 2006-46 Sharon Kozicki, P. A. Tinsley Surveys provide direct information on expectations, but only short histories are available at quarterly frequencies or for long-horizon expectations. Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Inflation targets, Monetary policy and uncertainty JEL Code(s): E, E3, E5
November 1, 2006 Renewal of the Inflation-Control Target (November 2006) Commentary and technical data relating to the 2006 target renewal. Content Type(s): Background materials Topic(s): Inflation and prices, Monetary policy
Survey of Price-Setting Behaviour of Canadian Companies Staff Working Paper 2006-35 David Amirault, Carolyn Kwan, Gordon Wilkinson In many mainstream macroeconomic models, sticky prices play an important role in explaining the effects of monetary policy on the economy. Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Monetary policy transmission JEL Code(s): D, D4, D40, E, E3, E30, L, L1, L11
The Macroeconomic Effects of Non-Zero Trend Inflation Staff Working Paper 2006-34 Robert Amano, Steve Ambler, Nooman Rebei The authors study the macroeconomic effects of non-zero trend inflation in a simple dynamic stochastic general-equilibrium model with sticky prices. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Inflation and prices, Inflation targets JEL Code(s): E, E2, E24, E3, E32