This paper documents the extent of financial linkages between Canada and the United States and explores the impact of changes in U.S. financial conditions on financial conditions and real economic activity in Canada. It shows that close to a quarter of financing by Canadian corporations is...

We examine the short- and long-term movements of government spending relative to output in 51 countries. We find that in the short term, the main components of government spending increase with output in about half of the sample countries, with some variation across spending categories and...

Macroeconomic shocks such as wil price increases induce a systematic (endogenous) response of monetary policy. We develop a VAR-based technique for decomposing the total economic effects of a given exogenous shock into the portion attributable directly to the shock and the part arising from the...

We use a dynamic general equilibrium model to obtain quantitative estimates of the welfare costs of nominal wage contracts. We find that the welfare costs of such contracts can vary quite a bit depending on the degree of indexation, the size and persistence of money supply uncertainty and the...

We extend the Hansen and Prescott (1991) method for the numerical computation of equilibria of dynamic business cycle models in which there are two sets of agents who play a dynamic Stackelberg game. Such models have application to analysis of issues of optimal government policy in which the...

We build a simple dynamic model of the business cycle with monopolistically competitive firms. With simple assumptions concerning firm entry and exit, the model can explain some important stylised facts of the business cycle which standard real business cycle models with perfect competition...

The agricultural sector has certain distinctive features over the business cycle: it is more volatile than and not positively correlated with the rest of the economy and its employment is counter-cyclical. Because of these features and even though the agricultural sector represents less than 2%...