The relative importance of oil in Canada’s exports bears on the debate about oil prices and the exchange rate. A challenge is that the most widely-cited figures often lump oil and natural gas together. I compiled the following table from the merchandise-trade figures that Statistics Canada updated through September today: Canada’s Energy Trade, 2007 year-to-date ($ millions)  Exports % […]
Read moreHeather Scoffield had an interesting little “how-to” guide in Saturday’s Globe and Mail on the macroeconomic effects of the improvement in Canada’s terms of trade (the result of soaring global prices for the resources which Canada increasingly exports). The terms of trade, for the blissfully uninitiated, is the ratio of a country’s export prices to its import prices. You can […]
Read moreLike other disciplines, economics tends to organize material into narratives. It is worth scrutinizing the “stylized facts” that underlie these narratives, as page B15 of Saturday’s Globe endeavoured to do. One piece of conventional wisdom is that the Canadian dollar’s value is driven by the skyrocketing price of oil. David Wolf argued, and Heather Scoffield reported, that the loonie is probably […]
Read moreThe United Steelworkers have put out the following press release: Research confirms value of manufacturing to Canada’s economy TORONTO, Oct. 4 /CNW/ – An interim report on manufacturing prepared by Ottawa-based econometrics firm Informetrica shows that manufacturing plays an important role in supporting all sectors of the economy, and has been hurt by both the recent appreciation of the dollar […]
Read moreFurther to my companion post (on the Commodity Price-Exchange Rate Transmission Mechanism), here is an op-ed from Buzz Hargrove that appeared in today’s National Post, responding to yesterday’s parity event. It reflects some of the arguments I made in the companion post about why, exactly, higher commodity prices drive our loonie higher. The policy implications of this view include some […]
Read moreWell, it happened. The petro-fueled loonie broke parity with the greenback yesterday, and is headed higher still. I can’t believe that so many people still interpret this as a symbol of our national renaissance. In fact, the reverse is true. The dollar’s flight both reflects, and simultaneously reinforces (in fine Kaldorian fashion) our regression into serving once again as a […]
Read moreThere’s a piece by Heather Scoffield in today’s Globe on the issue of the impact of exchange rate appreciation on consumer prices. http://www.theglobeandmail.com/servlet/story/RTGAM.20070920.wdollar20/BNStory/Front TD Bank argues that only a modest portion of the fall in import prices is being passed on, while Philip Cross from Statscan argues there is a much tighter link. On the face of it, he has […]
Read moreHow do we explain the behaviour of the Japanese yen — which has not only avoided the major appreciation (against the U.S. dollar) that other major currencies have experienced (most acutely including Canada’s), but is actually down by over 15% since 2005 (despite Wall Street’s financial wobbles)? Japan has the world’s third largest trade surplus, so if exchange rates reflect […]
Read moreAn interesting article just published by my friend Robert Blecker (American University) reinforces our concerns regarding the long-run impact of the loonie’s recent appreciation on the size and competitiveness of Canada’s manufacturing industry. Here’s the formal citation & abstract: The Economic Consequences of Dollar Appreciation for US Manufacturing Investment: A Time-Series Analysis Author: Robert A. Blecker a Affiliation: a American […]
Read moreFor once the headline-writers at the Globe gave my latest column (on continuing job losses in manufacturing) a better headline than the one I suggested (which in this case was a bland one: “Why manufacturing matters” zzzzzzzzzzz). Mind you, even their “blood on the floor” headline was not as eye-grabbing as Philip Cross’s year-old quote about carcass-hackers in Brandon Manitoba. […]
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