That shifts in the fundamental factors determining real exchange rates in the long term have strongly affected exchange rate movements is an increasingly popular idea. In particular, Amano and van Norden (1993) suggest that movements in Canada's terms of trade were particularly important in...

This paper summarizes the literature on economic growth. This literature suggests that investment in machinery and equipment (M&E) could foster economic growth. But, because of the need to cover the fixed costs of innovating, price is higher than the marginal cost and there will be...

The Canadian Economic and Fiscal Model (CEFM) is used by the Department of Finance to forecast key economic and fiscal indicators as well as to simulate the economic and fiscal effects of policy or economic changes. This paper documents the dynamic forecasting and simulation properties of the...

It is well known that over the next several decades, there will be significant changes in the age structure of OECD populations. According to recent demographic projections by the United Nations, the share of the old-aged population is expected to double, on average, over the next 50 years in...

The goal of this paper is to disentangle permanent and transitory components of U.S stock prices, using the SVECM methodology of King, Plosser, Stock and Watson (1991). This methodology uses the information contained in the cointegration vectors to identify the structural permanent shocks in the...

In this paper we describe in detail the general structure of a multi-country, multi-sector, dynamic general equilibrium model with imperfect competition. We also discuss the numerical data requirements and the calibration procedure, and we offer an illustrative simulation exercise based on a...

This paper examines the evolution of elderly families’ relative income. Its main objectives are to assess whether the income of elderly families has been following a downward trend in recent years and to compare their financial situation to that of non-elderly families. We use data from the...

This paper shows that managing the risk of a budget deficit has (at least) two elements, the level of fiscal prudence, and the scope for discretionary measures (e.g., scope for reducing program spending). These two elements jointly determine the probability of a deficit outcome. The magnitude of...

Firstly, the study illustrates in a stochastic simulation model that permanent commitments to tax and spending measures can be enriched significantly without substantially raising the risk of a deficit outcome. This result is obtained in a framework where the fiscal authority is able to monitor...