E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
Assessing Financial System Vulnerabilities: An Early Warning Approach
Bank of Canada Review - Autumn 2013 Gurnain Pasricha, Tom Roberts, Ian Christensen, Brad Howell
This article focuses on a quantitative method to identify financial system vulnerabilities, specifically, an imbalance indicator model (IIM) and its application to Canada. An IIM identifies potential vulnerabilities in a financial system by comparing current economic and financial data with data from periods leading up to past episodes of financial stress. It complements other sources of information - including market intelligence and regular monitoring of the economy - that policy-makers use to assess vulnerabilities.
Content Type(s): Publications, Bank of Canada Review Article Topic(s): Econometric and statistical methods, Financial stability, Monetary and financial indicators JEL Code(s): E, E6, E66, G, G0, G01
Housing and Tax Policy
Staff Working Paper 2013-33 Sami Alpanda, Sarah Zubairy
In this paper, we investigate the effects of housing-related tax policy measures on macroeconomic aggregates using a dynamic general-equilibrium model.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Economic models, Fiscal Policy, Housing JEL Code(s): E, E6, E62, H, H2, H24, R, R3, R38
Analyzing Fiscal Sustainability
Staff Working Paper 2013-27 Huixin Bi, Eric M. Leeper
The authors study the implications of fiscal policy behaviour for sovereign risk in a framework that determines a country's fiscal limit, the point at which, for economic or political reasons, taxes and spending can no longer adjust to stabilize debt.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Economic models, Fiscal Policy JEL Code(s): E, E6, E62, E65, H, H6, H63
Uncertain Fiscal Consolidations
Staff Working Paper 2013-26 Huixin Bi, Eric M. Leeper, Campbell Leith
The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition - either tax- or spending-based - are uncertain.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Economic models, Fiscal Policy, Uncertainty and monetary policy JEL Code(s): E, E6, E62, E63, H, H3, H30, H6, H60
Unconventional Monetary Policies: Evolving Practices, Their Effects and Potential Costs
Bank of Canada Review - Spring 2013 Lena Suchanek, Eric Santor
Following the recent financial crisis, major central banks have introduced several types of unconventional monetary policy measures, including liquidity and credit facilities, asset purchases and forward guidance. To date, these measures appear to have been successful. They restored market functioning, facilitated the transmission of monetary policy and supported economic activity. They have potential costs, however, including challenges related to the greatly expanded balance sheets of central banks and the eventual exit from these measures, as well as the vulnerabilities that can arise from prolonged monetary accommodation.
Content Type(s): Publications, Bank of Canada Review Article Topic(s): Central bank research, Financial markets, International topics, Monetary policy framework JEL Code(s): E, E5, E52, E58, E6, E65
The G-20 Framework for Strong, Sustainable and Balanced Growth: Macroeconomic Coordination Since the Crisis
Bank of Canada Review - Winter 2012-2013 Robert Lavigne, Subrata Sarker
Since 2009, the G-20 Framework for Strong, Sustainable and Balanced Growth has provided a mechanism for international macroeconomic policy coordination. The Framework has had some successes, including agreement on objectives for fiscal consolidation. However, post-crisis global growth has been neither strong nor balanced. Progress has also been slow in developing credible fiscal consolidation plans in some advanced countries and in increasing exchange rate flexibility in certain emerging economies. A stronger peer review process and enhanced analysis of international spillovers would increase the Framework's influence on member policies.
Content Type(s): Publications, Bank of Canada Review Article Topic(s): Exchange rate regimes, Fiscal Policy, International topics, Recent economic and financial developments JEL Code(s): E, E6, E61, F, F5, F53, F55
The U.S. Recovery from the Great Recession: A Story of Debt and Deleveraging
Bank of Canada Review - Winter 2012-2013 Brady Lavender, Nicolas Parent
The U.S. recovery from the Great Recession has been slow relative to other postwar-era recoveries in the United States. Encouraged by loose lending standards in the pre-crisis period, U.S. households took on unsustainable amounts of debt, making them vulnerable to adverse shocks. Subsequently, a considerable drop in asset prices forced households to repair their balance sheets. While there has been progress in household deleveraging, the government sector now needs to delever, which will restrain growth over the next few years.
Content Type(s): Publications, Bank of Canada Review Article Topic(s): Business fluctuations and cycles, International topics, Recent economic and financial developments JEL Code(s): E, E2, E21, E6, E60
Financial Development and the Volatility of Income
Staff Working Paper 2013-4 Tiago Pinheiro, Francisco Rivadeneyra, Marc Teignier
This paper presents a general equilibrium model with endogenous collateral constraints to study the relationship between financial development and business cycle fluctuations in a cross-section of economies with different sizes of their financial sector.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Credit and credit aggregates, Financial stability JEL Code(s): E, E3, E32, E6, E60
A General Equilibrium Model with Banks and Default on Loans
Staff Working Paper 2013-3 Tamon Takamura
During the recent financial crisis in the U.S., banks reduced new business lending amidst concerns about borrowers' ability to repay. At the same time, firms facing higher borrowing costs alongside a worsening economic outlook reduced investment.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Business fluctuations and cycles, Economic models, Financial stability JEL Code(s): E, E3, E32, E4, E44, E6, E69