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  • Articles and reports: 11F0027M2013085
    Geography: Canada
    Description:

    This paper presents a non-parametric approach for adjusting the multifactor productivity growth (MFPG) measure for variations in capacity utilization over time. In the framework developed here, a capital utilization measure is derived from the economic theory of production and is estimated by comparing the ex-post return with the ex-ante expected return on capital. The non-parametric approach is then compared with the parametric approach and the standard growth accounting framework. Both the non-parametric and parametric approaches correct for the cyclical bias in the standard MFPG measure, but the non-parametric approach offers more practical adjustment for capacity utilization, because it is easier to implement and more in line with the non-parametric approach long used by statistical agencies and researchers.

    Release date: 2013-07-23

  • Articles and reports: 11-626-X2012002
    Geography: Canada
    Description:

    This Economic Insight presents new data on the relative prices of Canadian and U.S. products, focusing on various classes of goods and services. It also evaluates the extent to which changes in these relative prices correlate with movements in the nominal exchange rate. The comparative price estimates are based on data from Statistics Canada's Purchasing Power Parity program.

    Release date: 2012-01-04

  • Articles and reports: 11-626-X2012003
    Geography: Canada
    Description:

    This Economic Insight discusses price differences between Canada and the United States. It is based on the concepts and methods from Statistics Canada's Purchasing Power Parity program.

    Release date: 2012-01-04

  • Articles and reports: 11F0027M2011075
    Geography: Canada
    Description:

    Labour productivity growth in the Canadian business sector slowed substantially after 2000. Most of the slowdown occurred in the manufacturing sector. This paper examines how this slowdown was associated with the restructuring that occurred in manufacturing as a result of the increase in excess capacity, the dramatic increase in the Canada-U.S. exchange rate and a slowdown in export growth.

    Release date: 2011-12-12

  • 5. 2010 in review Archived
    Articles and reports: 11-010-X201100411434
    Geography: Canada
    Description:

    As the recovery matured during the year, some economic trends closely resembled the performance of the economy before the recession. This was most evident in commodity prices, the stock market and the exchange rate. However, the pattern of net lending and borrowing showed a fundamental shift occurred during the recession and into the recovery.

    Release date: 2011-04-14

  • Articles and reports: 11F0027M2010063
    Geography: Canada
    Description:

    This paper examines how trade liberalization and fluctuations in real exchange rates affect export-market entry/exit and plant-level productivity. It uses the experience of Canadian manufacturing plants over three separate periods that featuring different rates of bilateral tariff reduction and differing movements in bilateral real exchange rates. The patterns of entry and exit responses as well as the productivity outcomes differ markedly in the three periods. Consistent with much of the recent literature, the paper finds that plants self-select into export markets-that is, more efficient plants are more likely to enter and less likely to exit export markets. The reverse also occurs: entrants to export markets improve their productivity performance relative to the population from which they originated and plants that stay in export markets do better than comparable plants that exited, lending support to the thesis that exporting boosts productivity. Finally, we find that overall market access conditions, including real exchange rate trends, significantly affect the extent of productivity gains to be derived from participating in export markets. In particular, the increase in the value of the Canadian dollar during the post-2002 period almost completely offset the productivity growth advantages that new export-market participants would otherwise have enjoyed.

    Release date: 2010-06-25

  • Articles and reports: 11F0027M2010061
    Geography: Canada
    Description:

    We examine the simultaneous effects of real-exchange-rate movements and of tariff reductions on plant death in Canadian manufacturing industries between 1979 and 1996. We find that both currency appreciation and tariff cuts increase the probability of plant death, but that tariff reductions have a much greater effect. Consistent with the implications of recent international-trade models involving heterogeneous firms, we further find that the effect of exchange-rate movements and tariff cuts on exit are heterogeneous across plants - particularly pronounced among least efficient plants. Our results reveal multi-dimensional heterogeneity that current models featuring one-dimensional heterogeneity (efficiency differences among plants) cannot fully explain. There are significant and substantial differences between exporters and non-exporters, and between domestic- and foreign- controlled plants. Exporters and foreign-owned plants have much lower failure rates; however, their survival is more sensitive to changes in tariffs and real exchange rates, whether differences in their efficiency levels are controlled or not.

    Release date: 2010-04-14

  • Articles and reports: 11F0027M2010059
    Geography: Canada
    Description:

    This paper uses Organisation for Economic Co-operation and Development (OECD) data to examine changes in labour productivity, real gross domestic product (GDP), real gross domestic income (GDI), economic aggregates and relative economic growth over time. Real GDI combines changes in production (real GDP), with a trading gain derived from relative price changes. The paper considers two sources of trading gains: the terms of trade and the real exchange rate. For OECD countries, the terms of trade is the more important price ratio, making a contribution to real income growth that is, on average, an order of magnitude larger than the real exchange rate.

    Over long time periods, the most important source of real income growth is changes in production. Over shorter time horizons, however, the trading gain can make noteworthy contributions. Changes in aggregates, like real private consumption or the relative economic performance of nations, are shown to be particularly dependent on the trading gain during the large swings in resource prices that occurred after 2002.

    Release date: 2010-01-28

  • Articles and reports: 11F0027M2009058
    Geography: Canada
    Description:

    This paper examines the different types of deflators that are used to compare volume estimates of national income and production across countries. It argues that these deflators need to be tailored to the specific income concept used for study. If the potential to spend concept is employed, a purchasing power deflator is needed. If a production based concept is used, a producing power deflator is necessary. The paper argues that present practice produces a hybrid deflator that fails both purposes when terms of trade shifts are large and offers a solution.

    Release date: 2009-12-10

  • Articles and reports: 11-621-M2009082
    Geography: Canada
    Description:

    Using data from Quarterly Financial Statistics (QFS) for Enterprises and National Balance Sheet Accounts (NBSA), this article examines the indebtedness and liquidity position of Canadian non-financial corporations from 1961 to 2009. Recent trends in these two financial indicators are also presented by industry.

    Release date: 2009-11-17
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  • Articles and reports: 11F0027M2009057
    Geography: Canada
    Description:

    This paper examines the challenges that the manufacturing sector has faced over the last half century focusing on both long- and short-term performance. It first examines whether there is evidence that this sector is in long-term decline. The paper also investigates how the industry has responded to specific shocks during this period from exchange-rate movements, trade liberalization and business cycles. It finds little evidence of long-term decline. Rather it describes how manufacturing has adapted to varying challenges, whether from demand shifts due to business cycles, relative price shifts associated with exchange rate shocks or changes in tariff regimes.

    Release date: 2009-07-28

  • Articles and reports: 11-010-X200800410559
    Geography: Canada
    Description:

    Despite the turmoil in financial markets and a slowdown in the US, Canada's growth was remarkably steady in 2007. This reflects the ongoing boom in the resource sector and the boost the rising loonie gave to domestic spending.

    Release date: 2008-04-10

  • Articles and reports: 11-010-X200800310537
    Geography: Canada
    Description:

    A study of which industries are most reliant on exports for their output, and which import the most inputs.

    Release date: 2008-03-13

  • Articles and reports: 11F0027M2007048
    Geography: Canada
    Description:

    Evaluations of an economy's economic performance are often made using a measure of real gross domestic product (GDP) per capita, which represents the average remuneration (labour income plus capital services) that an economy generates through domestic production.

    Because real GDP is a constant dollar measure of the remuneration to capital and labour in an economy, it does not account for who owns the capital, how much of it is used up through production or how relative price shifts affect the volume of goods and services that can be purchased.

    Modifications can be made to traditional estimates of GDP to account for these factors. This paper examines the performance of the Canadian economy using alternate measures' gross domestic income, gross national income and net national income. The paper also examines the relative performance of the Canadian and U.S. economies using standard GDP measures and these alternate measures.

    The comparison spans the period from 1980 to 2006, but focuses on the 2002-to-2006 period. During these latter years, changes in commodity prices, manufactured goods prices, the exchange rate, international investment income and capital consumption have all contributed importantly to real income growth in Canada.

    As a result, a very different picture of relative performance of the Canadian and U.S. economies emerges when an aggregate income measure is used that accounts for relative price changes, international income flows and capital consumption than when real GDP is used. From 2002 to 2006, U.S. real GDP per capita grew 9.3% while Canadian GDP per capita rose 7.0%, making it appear that the U.S. economy was outperforming the Canadian economy. However, once changes in resource prices and the exchange rate, international investment income and capital consumption are taken into account, real income per capita in the United States increased by 8.6%, which is similar to its GDP per capita growth. However, the Canadian adjusted measure of real income per capita growth rose 15.6%, more than twice the per capita real GDP growth in Canada and nearly double the U.S. rate.

    In contrast, the difference between the two economies was exactly the opposite in the period from 1980 to 2000 when commodity prices were falling, when the exchange rate was not appreciating and when outward flows of income to foreigners were increasing relative to the income paid to Canadians. During this period, when consideration is given to these factors, real income measures in Canada were falling relative to those in the United States.

    Release date: 2007-11-22

  • Articles and reports: 11-010-X200700810305
    Geography: Canada
    Description:

    The restructuring of the economy since 2003 has been driven by the surge in commodity prices resulting from the integration of China into the world economy. Labour and capital have shifted to the resource sector, notably in western Canada. Despite the rising exchange rate and lower prices manufacturers overall have maintained output while cutting jobs.

    Release date: 2007-08-16

  • Articles and reports: 11-624-M2007017
    Geography: Canada
    Description:

    This paper empirically investigates how the Canadian economy has evolved following the rise in commodity prices and appreciation of the Canadian dollar that began in 2003. The adjustment in the manufacturing industry has garnered the greatest attention because it has borne the brunt of job losses. However, the adjustment of the manufacturing industry has not been straightforward. Rather, a complex reallocation has been taking place within manufacturing that has been predominantly due to the integration of emerging nations into the global economy. The increased commodity prices and falling manufactured prices caused by this integration have affected durable and non-durable manufacturing industries differently. Non-durable manufacturers have tended to see their competitiveness eroded and their output has tended to fall. Durable manufacturers, on the other hand, have increased output in response to the resource boom and increased demand in general. The result has been stable manufacturing output overall, accompanied by a re-orientation of manufacturing output away from non-durables and toward durables.

    The appreciated dollar and higher commodity prices have also led to a more widespread industrial reallocation in Canada. The higher commodity prices have started a resource boom, particularly in Alberta. The boom has led to rising resource industry employment, while manufacturing employment declined, and to rising service-sector employment. It has contributed to inter-provincial migration, and has greatly increased the purchasing power of Canadian incomes as terms of trade have improved.

    Release date: 2007-08-16

  • Articles and reports: 11F0027M2006043
    Geography: Canada
    Description:

    The paper examines the pricing behaviour of 81 Canadian manufacturing industries from 1974 to 1996. It explores the domestic and foreign factors that affect price formation in Canada and the circumstances in which Canadian prices respond to foreign (U.S.) influences (the law of one price), as opposed to domestic factors (i.e., labour, energy costs and productivity growth). It finds that: (1) Canadian manufacturing prices are, on average, set using a mixture of a cost mark-up pricing rule and the law-of-one-price rule: both domestic factors (such as input prices and productivity) and foreign factors (such as competing U.S. prices) exert important influences on Canadian prices; (2) Canadian prices are more sensitive to U.S. prices if the industry faces higher import competition and if home and foreign products are less differentiated. Compared to prices of domestic products, prices of imported foreign products are more responsive to foreign prices. However, the price of imports also responds to Canadian prices; though this pricing-to-market phenomenon is reduced as imports increase in importance; (3) Industry differences exist. Domestic prices respond more to productivity changes in industries where competition is more intense and where products are more homogeneous. Imports respond more to domestic factors when they account for a smaller share of the domestic market; (4) As the pressure from foreign markets increases, in a period of an appreciating Canadian dollar, changes in prices are influenced more by fluctuations in foreign prices. In comparison, when the pressure from foreign markets decreases, in a period of a depreciating Canadian dollar, changes in Canadian prices are more responsive to input cost changes at home. Disequilibria that were generated by previous shocks are overcome more quickly during periods when the exchange rate appreciated.

    Release date: 2006-11-08

  • Articles and reports: 11F0027M2006041
    Geography: Canada
    Description:

    During the post-1970 period, Canadian manufacturing prices have alternately increased and fallen relative to U.S. prices' just the reverse of the cycle in the Canada' U.S. exchange rate. But not all manufacturing industries have experienced the same amplitude of relative price changes. This paper examines the industry characteristics that are related to the shifts in competitiveness, measured as the relative price ratio between Canadian prices and U.S. prices adjusted by the exchange rate. We find that relative factor input costs and relative productivity growth are the two most important factors influencing changes in relative Canada' U.S. prices. Competitive pressures emanating from trade are important determinants of the extent to which relative productivity differences are passed through to cross-country relative prices in the manufacturing sector. We also find that the magnitude of domestic market competition and export intensity affects the short-run relative price shifts over the cycle of exchange rate.

    Release date: 2006-06-28

  • Articles and reports: 11-621-M2006042
    Geography: Canada, Province or territory
    Description:

    This survey analyzes the highlights of consumer prices in 2005 focusing on the various components of the Consumer Price Index such as energy, services and durable goods, This study also looks at the provincial dimension and compares Canadian prices to other countries.

    Release date: 2006-05-17

  • Articles and reports: 11-010-X20060049178
    Geography: Canada
    Description:

    Canada has reverted to its more traditional orientation over the last three years, as prophecies of a new, tech-driven economy have not been realized. Surging demand and prices for energy and mining products was the dominant theme of the year. All regions benefited from these changes.

    Release date: 2006-04-13
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