Front Matter

Front Matter Page

© 2010 International Monetary Fund

December 2010

IMF Country Report No. 10/378

Canada: Selected Issues Paper

This paper was prepared based on the information available at the time it was completed on November 24, 2010. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Canada or the Executive Board of the IMF.

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Front Matter Page

INTERNATIONAL MONETARY FUND

CANADA

Selected Issues

Prepared by Nicoletta Batini, Thomas Dowling, Grace Bin Li, Evridiki Tsounta (all WHD), and John Kiff (MCM)

Approved by the Western Hemisphere Department

November 24, 2010

Contents

  • I. The Post-Crisis Canadian Housing Market

    • A. Introduction

    • B. The Ups and Downs Following the Crisis

    • C. Estimation

    • D. Conclusions

  • Figures

  • I.1. G-7: Price-to-Income and Price-to-Rent Ratios, 1970–2010

  • I.2. Select Eastern Canadian Provinces: House Price Deviations from Model Predictions, 1993Q1–2010Q3

  • I.3. Select Western Canadian Provinces: House Price Deviations from Model Predictions, 1993Q1–2010Q3

  • I.4. House Price Dynamics

  • II. Interpreting Canada’s Currency Movements During the Crisis

    • A. Background

    • B. Empirical Results

  • Appendix

  • II.1. Methodology and Diagnostic Tests

  • Appendix Tables

  • II.1. Tests for Unit Roots and Stationarity (1992Q4 to 2010Q2)

  • II.2. Co-Integration Tests

  • II.3. Test for Weak Exogeneity: LR Test for Binding Restrictions

  • II.4. Estimation Results

  • III. Canada’s Potential Growth: A Post-Crisis Assessment

    • A. Introduction

    • B. Main Findings

    • C. Conclusions and Policy Implications

  • Tables

    • III.1. Path for Potential Output Growth Components

  • Figures

    • III.1. Canada: Potential Output Growth

  • IV. The Bumpy Road Ahead for North American Automakers

    • A. Background

    • B. Spillover Analysis: How Would the Canadian Auto sector Weather a U.S. Double-Dip Recession?

    • C. Long-Term Challenges

  • Tables

    • IV.1. Auto Industry Performance During the Crisis

    • IV.2. Automotive Industry in 2009

    • IV.3. Impact of U.S. Growth on Canadian Automotive Industry Under Alternative Growth Scenarios

  • Figures

    • IV.1. State of the Auto Industry

    • IV.2. Projected North American Automotive Sales in Alternate Scenarios

  • Boxes

    • IV.1. Canada’s Auto Industry and the “Big Three”

  • V. Canada’s Housing Finance System: Policy Backdrop

Canada: Selected Issues Paper
Author: International Monetary Fund