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8936 Results

December 14, 1998

Downward wage rigidity

There has recently been considerable discussion about the ability of inflation to facilitate the adjustment of prices and wages and thus enhance economic performance. The discussion centres on whether wages are downwardly rigid. Wages are said to be downwardly rigid if it is difficult for the wages of some workers to fall despite underlying supply and demand pressures for decreases. Some authors have suggested that if downward nominal wage rigidity is prevalent it would be desirable to select a positive rate of inflation as the target for monetary policy. In this article, the authors evaluate the wage-rigidity hypothesis. They first examine the empirical evidence to assess whether the degree of downward rigidity is significant in Canada. They then analyze some key assumptions of the wage-rigidity hypothesis and its implications for employment. They also look at the empirical evidence on whether the combination of downward wage rigidity and low inflation has reduced employment.
December 13, 1998

Survey of the Canadian foreign exchange and derivatives markets

In April 1998, the Bank of Canada conducted its triennial survey of activity in the Canadian foreign exchange and derivatives markets. This was part of a coordinated international effort in which 43 countries carried out similar surveys. The foreign exchange market in Canada is the 11th largest in the world, and the Canadian dollar is the 7th most-traded currency globally. The average daily turnover of traditional foreign exchange transactions has grown by 23 per cent (to US$37 billion) since the last survey in 1995. Although this growth was substantial, the rate of increase has declined steadily since the survey began in 1983. The average daily turnover for single-currency interest rate derivatives during April 1998 was US$6.4 billion, an increase of 48 per cent over the previous survey.
December 12, 1998

Conference summary: Information in financial asset prices

This article summarizes the proceedings of a conference hosted by the Bank of Canada in May 1998. This was the second Bank conference to focus directly on issues concerning financial markets. The topic for 1998—the extraction of information from the prices of financial assets—has been an area of extensive research by central banks worldwide because of its connection to monetary policy. The Bank wanted to encourage such work by Canadian researchers as well as solicit feedback on work conducted internally. It also wanted to broaden the understanding of the interplay in the markets between central banks and other participants. It therefore assembled a wide mix of researchers, central bankers, and market participants. The summary briefly outlines the papers presented as well as the wrap-up discussion.

Une nouvelle méthode d'estimation de l'écart de production et son application aux États-Unis, au Canada et à l'Allemagne

Staff Working Paper 1998-21 René Lalonde, Jennifer Page, Pierre St-Amant
This study introduces a new method for identifying the output gap, based on the estimation of multivariate autoregression (VAR) models. This approach, which involves using restrictions to identify structural shocks that have only a transitory effect on output but that affect the trend inflation rate, is compared with the decomposition method proposed by Blanchard and […]
November 19, 1998

Opening Statement before the Standing Senate Committee on Banking, Trade and Commerce

Opening statement Gordon Thiessen Standing Senate Committee on Banking, Trade and Commerce
Mr. Chairman, my colleagues and I always welcome our appearances before your committee. We released our latest Monetary Policy Report this past Monday. It covers a broad range of economic and monetary issues and provides an account of our policy actions and their results. The ultimate objective of Canadian monetary policy is to help create […]
November 17, 1998

Opening Statement before the House of Commons Standing Committee on Finance

Opening statement Gordon Thiessen House of Commons Standing Committee on Finance
Mr. Chairman, my colleagues and I welcome these appearances before your committee following each edition of the Bank of Canada’s Monetary Policy Report. As you know, we published our latest report yesterday. It touches on a wide range of economic and monetary issues and provides an opportunity for us to account for our policy actions […]
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