This Selected Issues paper reviews empirical evidence on the main determinants of the real bilateral exchange rate between the Canadian and the U.S. dollars, with particular emphasis on the role played by cyclical and longer-term economic factors. The paper aims to identify the nature of the...

This Selected Issues paper reviews the factors that may explain high and persistent unemployment in Canada, with particular emphasis on the role that a decline in the relative cost of capital may have had on trend unemployment. The analysis suggests that in Canada a declining trend in the cost...

The paper investigates how changes in industries'' funding costs affect total factor productivity (TFP) growth. Based on panel regressions using 31 U.S. and Canadian industries between 1991 and 2007, and using industries'' dependence on external funding as an identification mechanism, we show...

After recovering rapidly from the Great Recession, the Canadian economy has slowed down in 2012. Growth weakened in the first three quarters of 2012, and recent indicators have suggested that the pace of economic expansion remained subpar in the fourth quarter. The fiscal policy has continued to...

This paper assesses the impact of high household debt on economic volatility in Canada. The debt per se may not necessarily be a risk for economic activity; it can amplify other shocks as well. A few studies have emphasized the link between the growth of household debt before 2007 and the...

The pace of financial market innovation in Canada quickened in the past decade or so with implications for the empirical relationships between the various monetary aggregates and other economic variables. Against this background, this paper, using an error correction formulation, presents new...

The relationship between current account developments and changes in the macroeconomic environment remains a key issue in open economy macroeconomics. This paper extends the standard intertemporal optimizing model of the current account to incorporate the effects of macroeconomic uncertainty on...

This paper examines the endogeneity of several structural variables which enter unemployment rate equations—the generosity of unemployment benefits, nonwage labor costs, the relative minimum wage, and the degree of unionization. It finds evidence of reverse causality for these structural...

This paper asks whether adversity spurs the introduction of process innovations and increases the use of managerial incentives by firms. Using a large panel data set of workplaces in Canada, our identification strategy relies on exogenous variation in adversity arising from increased border...

Using a dataset of science and engineering graduates from 12 European countries, we analyse the determinants of labour migration after graduation. We find that not only wage gains are driving the migration decision, but also differences in labour market opportunities, past migration experience,...