Real-Financial Linkages In The Canadian Economy: An Input--Output Approach
AbstractThe recent financial crisis highlighted the importance of better understanding the interaction between macroeconomic and financial conditions. In this paper, we provide a financial social accounting matrix for the Canadian economy and use it to assess the strength of real-financial linkages by calculating and comparing multipliers with and without endogenous financial flows. It is found that taking into account financial flows increases the impact of a final demand shock on output by 4--11%. Moreover, between 2008 and 2009H1, the investment decisions of financial institutions together with the fact that non-financial institutions were unwilling or unable to increase their financial liabilities led to estimated declines in all GDP multipliers. The impact of a final demand shock on GDP declined 3--5%, while the impact of an increase in the availability of investment funds fell 30% and 55% for financial and non-financial corporations, respectively.† -super-†The views expressed in this paper are those of the authors. No responsibility for them should be attributed to Statistics Canada.
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Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal Economic Systems Research.
Volume (Year): 24 (2012)
Issue (Month): 2 (September)
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Web page: http://taylorandfrancis.metapress.com/link.asp?target=journal&id=104572
Other versions of this item:
- Danny Leung & Oana Secrieru, 2011. "Real-Financial Linkages in the Canadian Economy: An Input-Output Approach," Working Papers 11-14, Bank of Canada.
- Leung, Danny Secrieru, Oana, 2011. "Real-Financial Linkages in the Canadian Economy: An Input-Output Approach," Economic Analysis (EA) Research Paper Series 2010065e, Statistics Canada, Analytical Studies Branch.
- C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
- D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
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