The Impact Of The Global Crisis on Canada: What Do Macro-Financial Linkages Tell Us?
AbstractThis paper builds a Bayesian VAR estimation model of growth for Canada, by focusing specifically on the role of external and domestic financial indicators, including credit conditions. A variance decomposition shows that financial conditions explain one-third of the total variability in Canada's real GDP growth, although changes in U.S. real GDP growth still account for a larger share of volatility in Canadian growth. A macro-financial conditions index built from the VAR's impulse responses shows that U.S. real GDP growth and lending standards will increasingly bear on Canada's growth, implying that a normalization of the U.S. economic and financial conditions is key for a sustained recovery in Canada.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/5.
Date of creation: 01 Jan 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-30 (All new papers)
- NEP-BAN-2010-01-30 (Banking)
- NEP-BEC-2010-01-30 (Business Economics)
- NEP-FDG-2010-01-30 (Financial Development & Growth)
- NEP-MAC-2010-01-30 (Macroeconomics)
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