Category Canadian economy
On the Canada-US decoupling
There has been a certain amount of discussion about the ‘decoupling’ hypothesis: Economic train wreck in the U.S. would hit Canada, decoupled or not: After subprime, decoupling just might be the most overused word of the year in economics. A quick database search yields hundreds of newspaper stories about the decoupling phenomenon in the past […]
The CAD appreciation finally passes through to inflation
The long wait for the pass-through appears to be over: according to today’s CPI release, core inflation has gone from 2.5% in June down to 1.8% in September. (The headline CPI number was 2.4%). The only sectors where prices didn’t fall were in the areas least affected by the exchange rate: shelter and services. Although […]
Why would the Bank of Canada reduce interest rates on December 4?
The last time the Bank of Canada announced its target for the overnight rate, it decided to keep its previous level of 4.5%, and it said that that it was planning on keeping that rate for at least the next few months. It’s been a month since then; is there any reason why the Bank […]
Manufacturing provincialism
The CAD has been climbing fast, so it’s to be expected that its altitude would start to affect some people’s decision-making skills. But you’d think that the premiers of Canada’s two largest provinces would keep their heads, wouldn’t you? Well, no. Calling on Stephen Harper to "do something" about the appreciating CAD is an extraordinarily […]
Canada’s tax system is regressive
A while ago, I blogged about a study using data from way back in 1988 that suggested that Canada had a tax system that was essentially flat. Since then, we’ve seen the arrival of the GST and any number of changes to personal income taxes, so an update to that study was high on my […]
The Bank of Canada shifts back to neutral
As predicted, the Bank of Canada decided to keep its overnight target at 4.5% on Tuesday. That’s twice now that the Bank has put off applying the tightening it started in July, and it looks as though this temporary pause has now been upgraded to a medium-term strategy. The October Monetary Policy Report (32-page pdf) […]
Canada’s indestructible trade surplus
Canada’s trade surplus widened in August, and – notwithstanding a 45% appreciation in the CAD-USD exchange rate – is still roughly the same as it was five years ago:
A week of mixed signals for the Bank of Canada
On the one hand, the Bank of Canada has had to intervene repeatedly in the overnight market to defend its target. (It has also added liquidity in the the two days since that post: $495m yesterday and again $420m today.) And the spread between the overnight rate and that of short-term paper is still well […]
What is going on in the overnight market?
The Bank of Canada has intervened in the overnight market for four days in a row now: $985m on Thursday, $1.087b on Friday, $890m Monday, and another $855m yesterday. Update: Make it five in a row – another $520m today. What’s going on? The Globe and Mail’s Heather Scoffield had an article on this the […]
Manufacturing pointlessness
I can understand that the Toronto Star’s editorial board has fallen victim to the Manufacturing Obsession, and that it feels obliged to make the case that the interests of seven people who work outside the manufacturing sector are as nothing before those of a single Manufacturing Worker. But I can’t understand why it thinks that […]
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