A lively debate is underway about replacing Canada’s 2 percent inflation target with a target for lower inflation or a target for the price level itself when Canada’s inflation-control arrangement expires at the end of 2011. Either change could reduce uncertainty about changes in the value...

During the past 30 years, Canada’s share of world foreign direct investment (FDI) has been subject to a secular decline. Further, according to various measures of openness to foreign investments, Canada does not rank favourably against many of its peers. One of the culprits is Canada’s...

Our understanding of the links between the financial sector and the rest of the economy needs to improve concludes this report. The authors say that the complexity of these linkages have been neglected in the models typically used to guide monetary policy – the question is how to remedy...

The market for asset-backed securities (ABS) – financial instruments backed by underlying assets such as mortgages – suffered a major setback in 2007, as a cascade of downgrades and defaults brought turmoil to credit markets and the world economy. Authorities in the United States have since...

With inflation as measured by the Consumer Price Index (CPI) growing faster than the Bank of Canada’s 2 percent target, the Bank has pointed out that core CPI, which excludes items whose prices are especially volatile, is at or below target and, further, that the Bank anticipates total CPI...

The Bank of Canada should pay closer attention to the effects of money and credit growth on inflation and asset markets. The authors contend that maintaining price stability should remain the Bank’s only formal goal, but say greater attention should be paid to asset market stability. Once the...

The asset-backed securities (ABS) market suffered a major setback during the financial crisis that began in 2007. Its role in the broader market collapse has been well documented, but the need to restore a healthy ABS market is equally clear. Indeed, North American policymakers have readily...

Market-based economies tend to exhibit cyclical behaviour. The recent financial crisis, with devastating impacts that are still being felt today, has added urgency to the drive to improve our understanding of business cycles. Pinpointing key turning points in the economy, meaning when recession...

Financial instruments indexed to the general price level are of great potential use to borrowers and lenders alike. But up until recently, they have been relatively scarce – in part because private borrowers dislike offering protection against inflation that they do not control. Since the...

Canadians are avid users of debit and credit cards and other electronic payment options. Compared to consumers in other countries, they are among the heaviest users of debit cards to make purchases at retail stores. But Canada’s payment system has fallen behind – cell phones with payment...