The Credit Cycle And The Business Cycle In Canada And The U.S.: Two Solitudes
Recent events highlight the importance of understanding the relationship between credit availability and real economic activity. This paper estimates macroeconomic models for Canada to investigate the relationship between changes in non-price lending standards, business loans and output. We allow for the possibility that macroeconomic and financial market conditions in the U.S. affect those in Canada. The responses to financial shocks are dissimilar in both countries. Real time data are also found to have a significant impact on the results. The U.S. and Canada may indeed be likened to 'two solitudes' insofar as the impact of credit conditions is concerned. Differences in the quality of banking standards and supervision of financial institutions, as well differences in the effectiveness of monetary policies in the two countries may partially explain the results.
|Date of creation:||10 Mar 2014|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (519) 884-0710 ext 2056
Fax: (519) 884-0201
Web page: http://lcerpa.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fuerst, Timothy S., 1994. "The availability doctrine," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 429-443, December.
- Illing, Mark & Liu, Ying, 2006. "Measuring financial stress in a developed country: An application to Canada," Journal of Financial Stability, Elsevier, vol. 2(3), pages 243-265, October.
- Tamim Bayoumi & Ola Melander, 2008. "Credit Matters: Empirical Evidence on U.S. Macro-Financial Linkages," IMF Working Papers 08/169, International Monetary Fund.
- Ben Bernanke & Jean Boivin & Piotr S. Eliasz, 2005.
"Measuring the Effects of Monetary Policy: A Factor-augmented Vector Autoregressive (FAVAR) Approach,"
The Quarterly Journal of Economics,
MIT Press, vol. 120(1), pages 387-422, January.
- Tom Doan, . "RATS programs to replicate Bernanke, Boivin, Eliasz FAVAR paper," Statistical Software Components RTZ00012, Boston College Department of Economics.
- Ben S. Bernanke & Jean Boivin & Piotr Eliasz, 2004. "Measuring the effects of monetary policy: a factor-augmented vector autoregressive (FAVAR) approach," Finance and Economics Discussion Series 2004-03, Board of Governors of the Federal Reserve System (U.S.).
- Ben S. Bernanke & Jean Boivin & Piotr Eliasz, 2004. "Measuring the Effects of Monetary Policy: A Factor-Augmented Vector Autoregressive (FAVAR) Approach," NBER Working Papers 10220, National Bureau of Economic Research, Inc.
- Vladimir Klyuev, 2008. "Real Implications of Financial Linkages Between Canada and the United States," IMF Working Papers 08/23, International Monetary Fund.
- Wouter J. Den Haan & Steven W. Sumner & Guy M. Yamashiro, 2009. "Bank loan portfolios and the Canadian monetary transmission mechanism," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 1150-1175, August.
- Lown, Cara & Morgan, Donald P., 2006.
"The Credit Cycle and the Business Cycle: New Findings Using the Loan Officer Opinion Survey,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 38(6), pages 1575-1597, September.
- Lown, Cara & Morgan, Donald P., 2004. "The Credit Cycle and the Business Cycle: New Findings Using the Loan Officer Opinion Survey," SIFR Research Report Series 27, Institute for Financial Research.
- Christopher A. Sims & Tao Zha, 1995.
"Error bands for impulse responses,"
FRB Atlanta Working Paper
95-6, Federal Reserve Bank of Atlanta.
- Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, June.
- Dean Croushore, 2008.
"Frontiers of real-time data analysis,"
08-4, Federal Reserve Bank of Philadelphia.
- Thomas J. Cunningham, 2006. "The predictive power of the Senior Loan Officer Survey: do lending officers know anything special?," FRB Atlanta Working Paper 2006-24, Federal Reserve Bank of Atlanta.
- Umar Faruqui & Paul Gilbert & Wendy Kei, 2008. "The Bank of Canada's Senior Loan Officer Survey," Bank of Canada Review, Bank of Canada, vol. 2008(Autumn), pages 57-64.
When requesting a correction, please mention this item's handle: RePEc:wlu:lcerpa:wm0065. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Andrei Kovacsik)
If references are entirely missing, you can add them using this form.