Business fluctuations and cycles
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November 16, 2017
Factors Behind the 2014 Oil Price Decline
Oil prices have declined sharply over the past three years. While both supply and demand factors played a role in the large oil price decline of 2014, global supply growth seems to have been the predominant force. The most important drivers were likely the surprising growth of US shale oil production, the output decisions of the Organization of the Petro-leum Exporting Countries and the weaker-than-expected global growth that followed the 2009 global financial crisis. -
October 3, 2017
Seeking Gazelles in Polar Bear Country
Deputy Governor Sylvain Leduc discusses the decline in firm creation and productivity in the Canadian economy. -
September 27, 2017
The Meaning of “Data Dependence”: An Economic Progress Report
Governor Stephen S. Poloz discusses how unknowns in Canada’s inflation outlook have made the Bank’s monetary policy particularly data dependent. -
Changes in Monetary Regimes and the Identification of Monetary Policy Shocks: Narrative Evidence from Canada
We use narrative evidence along with a novel database of real-time data and forecasts from the Bank of Canada's staff economic projections from 1974 to 2015 to construct a new measure of monetary policy shocks and estimate the effects of monetary policy in Canada. -
Aggregate Fluctuations and the Role of Trade Credit
In an economy where production takes place in multiple stages and is subject to financial frictions, how firms finance intermediate inputs matters for aggregate outcomes. This paper focuses on trade credit—the lending and borrowing of input goods between firms—and quantifies its aggregate impacts during the Great Recession. -
September 18, 2017
How Canada’s International Trade is Changing with the Times
Deputy Governor Timothy Lane discusses the changing nature of international trade and the factors that are propelling it. -
The Rise of Non-Regulated Financial Intermediaries in the Housing Sector and its Macroeconomic Implications
I examine the impact of non-regulated lenders in the mortgage market using a dynamic stochastic general equilibrium (DSGE) model. My model features two types of financial intermediaries that differ in three ways: (i) only regulated intermediaries face a capital requirement, (ii) non-regulated intermediaries finance themselves by selling securities and cannot accept deposits, and (iii) non-regulated intermediaries face a more elastic demand. -
How to Predict Financial Stress? An Assessment of Markov Switching Models
This paper predicts phases of the financial cycle by using a continuous financial stress measure in a Markov switching framework. The debt service ratio and property market variables signal a transition to a high financial stress regime, while economic sentiment indicators provide signals for a transition to a tranquil state. -
A Structural Interpretation of the Recent Weakness in Business Investment
Since 2012, business investment growth has slowed considerably in advanced economies, averaging a little less than 2 per cent versus the 4 per cent growth rates experienced in the period leading up to crisis. Several recent studies have attributed a large part of the weakness in business investment to cyclical factors, including soft aggregate demand, and, to a lesser degree, heightened uncertainty and tighter financial conditions.