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Between 2002 and 2008, global commodity prices rose to unprecedented levels. This article examines the process of adjustment to the commodity boom in four industrialized, commodity-exporting countries (Australia, Canada, New Zealand, and Norway). The article focuses on both the direct adjustment within the commodity-producing sectors (via increased employment and capital spending) and the indirect adjustment in the macro economy. The analysis finds that the indirect adjustment process, which was triggered by the increase in incomes that the commodity-price boom generated, has been the most important part of the adjustment in all four economies. Through this channel, aggregate demand rose, exchange rates appreciated, and adjustment was facilitated in other sectors, such as manufacturing and construction.

Although the standard of living of Canadians has improved as a result of terms-of-trade gains created by the sharp rise in real commodity prices over the past five years or so, the commodity-price increase, combined with an exchange rate appreciation and real income gain, triggered structural adjustments by altering underlying economic incentives. The frictions generated in adjusting to the relative price shock have likely contributed to hold back aggregate productivity growth. Dupuis and Marcil examine the structural adjustments that have been required-in particular, the resource reallocation among the different sectors of the economy-and its effects on employment, output, and productivity, as well as the responses of final domestic demand and external trade flows.

The Bank of Canada maintains regular contact with financial institutions as part of the information-gathering process that feeds into the larger set of information used to arrive at its monetary policy decision. Since 1999, the Bank has been conducting a quarterly survey of the business-lending practices of major Canadian financial institutions. Analysis of the information collected shows that it is correlated with future growth in both credit and business investment. This article focuses on how the survey is conducted and describes the construction of the summary statistics, highlighting the key statistical relationships in the historical survey data.

Conference held on 12 and 13 September 2008 (papers in unedited, electronic format only)

Since August 2007, the Bank of Canada has undertaken a number of initiatives to support its ability to provide liquidity to the financial system.

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Leonard C. Wyon: Canada’s Victorian Engraver

Photography by Gord Carter

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 3 per cent.

The Bank of Canada is pleased to announce the recipients of its 2008 Law Enforcement Award of Excellence for Counterfeit Deterrence.

The financial turbulence over the past year has been costly and difficult for many individuals and financial institutions; it's been challenging for policy-makers; and it's had implications for the overall economy.

The Bank of Canada today released its 2009 schedule of eight dates for announcing decisions on its key policy interest rate, and confirmed the announcement dates for the remainder of this year.