Canadian Journal of Economics-Revue Canadienne D Economique最新文献

We study the behaviour of Canadian Total Factor Productivity (TFP) growth over the past 60 years. We find that the observed stagnation during the last 20 years is accounted for entirely by the oil sector. Higher oil prices made capital-intensive sources of oil like the oil sands viable to extract on a commercial scale. However, the greater input required per barrel of oil slowed TFP growth. Comparing Canadian TFP growth with that of the United States and Norway reinforces these results. However, our result should not be interpreted to carry any welfare implications.

Artificial intelligence (AI) may be the next general purpose technology. General purpose technologies, such as the steam engine and computing, can have an outsized impact on productivity through a positive feedback loop between producing and application industries. Along with the discussion of AI's potential to improve productivity come a number of policy concerns related to AI's potential to automate jobs and to create existential risk for humanity. Because of these worries, in March 2023, a widely circulated petition called for a pause in AI research. That letter asked several questions about AI's potential impact on society. This paper examines those questions through an economic lens. It highlights reasons to be optimistic about the long-run impact of AI, while underscoring short-run risks. Economic models provide an understanding of where the ambiguity lies and where it does not. Our models suggest no ambiguity on whether there will be jobs and little ambiguity on long-term productivity growth if AI diffuses widely. In contrast, there is substantial ambiguity on the implications of AI's diffusion for inequality.

Canada initiated the formation of the (modern) imperial trade bloc in 1897 when it extended preferential market access to imports from Britain. British goods initially received a preferential reduction of one eighth of the applicable duty, rising to one quarter in 1898 and one third in 1900. Because duties varied across imported commodities, the uniform relative margins of preference resulted in cross-commodity variation in the absolute margins of preference. This cross-commodity variation is exploited in our paper. Relying on a data set that includes over 32,000 Canadian import products, we find that a 1 percentage-point increase in the absolute margin of preference was associated with a 5.4% increase in the value of imports from Britain. Counterfactually, if Canada had not adopted a preferential trade policy, by 1903, the value of British imports into Canada would have been reduced by approximately one half.

This paper examines the relative importance of global, regional, country and idiosyncratic factors as well as the determinants that underpin fluctuations in international trade flows across different regions of the world. Our analysis starts by using a Bayesian dynamic latent factor model (BDFM) to simultaneously estimate the four dynamic factors, followed by the application of Bayesian model averaging to identify the variables that explain the shares of variance. Our key findings are: (i) international factors are the most important in explaining fluctuations in international trade, suggesting that the interconnections between economies and policies/shocks at the regional and global level tend to be more important than country-level factors and (ii) regional integration, particularly when the agreement goes beyond trade in goods, is positively related to the share of the regional factor and inversely related to the importance of the global factor. Furthermore, the regional factor is more important in the case of economically large trade blocks. Overall, our analysis illustrates the usefulness of applying a BDFM model to study the co-movements of international trade series.

The paper considers a two-country model with international capital mobility and production-generated cross-border pollution. It examines the effectiveness of alternative policy combinations consisting of capital taxes and nationally or internationally tradable emissions permits in reducing global pollution. The internationally mobile capital is taxed according to three different rules, namely, capital tax exemptions, capital tax credits and capital tax deductions. Our key result is that, under certain conditions, the lowest Nash equilibrium level of global pollution is achieved with a policy mix combining either capital tax exemptions or capital tax credits with internationally, rather than nationally, tradable emission permits.

We analyze vertical integration incentives in a bilaterally duopolistic industry with bargaining in the input market. Vertical integration incentives are a combination of horizontal integration incentives upstream and downstream and depend on the strength of substitutability and complementarity and the shape of the unit cost function. Under particular circumstances, vertical integration can convey more bargaining power to the merged entity than a horizontal merger to monopoly. In a bidding game for an exogenously determined target firm, a vertical merger can dominate a horizontal one, while pre-emption does not occur.

In this paper, I examine the relationship between a basic income as a policy tool and the functioning of the labour market. I focus on three key areas where a basic income has been hypothesized to relate to labour markets: (i) through altering work decisions, (ii) as a response to predicted changes in work arising from technological change and (iii) as backstop that would allow workers to demand better working conditions and higher wages. I provide answers on the role or impact of a basic income in each area in the context of the current Canadian labour market. But a key focus in the paper is on the ways we could alter our labour market models to provide a better basis for debating the impacts of policies like a basic income in the context of a goal of moving toward a more just society.

We document the rise the intergenerational transmission of income using newly updated administrative Canadian tax data for children born between the early 1960s and the mid-1980s. We show that children whose parents were in the bottom income quintile have become less likely to exit the bottom quintile once in adulthood and less likely to transition into the middle class. Declining mobility is observed both at the national and provincial level. While federal and provincial policy-makers should worry about the rise in the strength of the poverty trap, the impact of recent policy developments on children that have yet to become adults remains to be documented.

In this lecture, I review work addressing three questions. First, are predictions about macro stabilization policies robust to reasonable departures from rational expectations? Second, do people's expectations converge to a particular set of rational expectations? Third, if they do converge, how quickly? I discuss examples from the literature where the answer to the first question is no. The answer to the second question is that learning equilibria converge to the “standard” rational equilibria analyzed in new Keynesian models. Finally, I discuss circumstances under which the answer to the third question is very slowly. In the examples, learning is slowest and policy analysis based on rational expectations is least robust in the face of shocks that render the stakes of getting policy “right” the highest.

Whether judges and prosecutors should be given full discretionary power in sentencing or mandatory minimum sentences be imposed remains a fiercely debated topic. In this paper, we examine the impact of Canada's 2005 introduction of minimum sentences on sexual offences against children and child pornography on the distribution of sentence lengths using administrative data containing the universe of these offences that occurred between 2003 and 2007. We find that the average sentence length for affected crimes at times increased by substantially more than the newly imposed minimum, and effects of the policy appear even in the middle and upper portions of the sentencing distribution. These increases occur immediately following the policy change, signalling that judges and prosecutors quickly change their sentencing behaviour after the implementation of mandatory minimum sentences. These lengthier sentences have significant implications for the estimation of the fiscal costs of minimum sentencing policies.