Can structural small open economy models account for the influence of foreign disturbances?

This paper demonstrates that an estimated, structural, small open-economy model of the Canadian economy cannot account for the substantial influence of foreign-sourced disturbances identified in numerous reduced-form studies. The benchmark model assumes uncorrelated shocks across countries and implies that U.S. shocks account for less than 3 percent of the variability observed in several Canadian series, at all forecast horizons. Accordingly, model-implied cross-correlation functions between Canada and U.S. are essentially zero. Both findings are at odds with the data. A specification that assumes correlated cross-country shocks partially resolves this discrepancy, but still falls well short of matching reduced-form evidence.Economic conditions

Central Bank Communication and Expectations Stabilization

This paper analyzes the value of communication in the implementation of monetary policy. The central bank is uncertain about the current state of the economy. Households and firms are uncertain about the statistical properties of aggregate variables, including nominal interest rates, and must learn about their dynamics using historical data. Given these uncertainties, when the central bank implements optimal policy, the Taylor principle is not sufficient for macroeconomic stability: for reasonable parameterizations self-fulfilling expectations are possible. To mitigate this instability, three communication strategies are contemplated: i) communicating the precise details of the monetary policy -- that is, the variables and coefficients; ii) communicating only the variables on which monetary policy decisions are conditioned; and iii) communicating the inflation target. The first two strategies restore the Taylor principle as a sufficient condition for stabilizing expectations. In contrast, in economies with persistent shocks, communicating the inflation target fails to protect against expectations driven fluctuations. These results underscore the importance of communicating the systematic component of monetary policy strategy: announcing an inflation target is not enough to stabilize expectations -- one must also announce how this target will be achieved.

Monetary policy and uncertainty in an empirical small open economy model

This paper explores optimal policy design in an estimated model of three small open economies: Australia, Canada and New Zealand. Within a class of generalized Taylor rules, we show that to stabilize a weighted objective of output, consumer price inflation and nominal interest variation optimal policy does not respond to the nominal exchange. This is despite the presence of local currency pricing and due, in large part, to observed exchange rate disconnect in these economies. Optimal policies that account for the uncertainty of model estimates, as captured by the parameters' posterior distrbution, similarly exhibit a lack of exchange rate response. In contrast to Brainard (1967), the presence of parameter uncertainty can lead to more or less aggressive policy responses, depending on the model at hand.

Incomplete Markets, Heterogeneity and Macroeconomic Dynamics

This paper solves a real business cycle model with heterogeneous agents and uninsurable income risk using perturbation methods. A second order accurate characterization of agent's optimal decision rules is given, which renders the implications of aggregation for macroeconomic dynamics transparent. The role of cross-sectional holdings of capital in determining equilibrium dynamics can be directly assessed. Analysis discloses that an individual's optimal saving decisions are almost linear in their own capital stock giving rise to permanent income consumption behavior. This provides an explanation for the approximate aggregation properties of this model documented by Krusell and Smith (1998): the distribution of capital does not affect aggregate dynamics. While the variance-covariance properties of endogenous variables are almost entirely determined by first order dynamics, the second order dynamics, which capture properties of the wealth distribution, are nonetheless important for an individual's mean consumption and saving decisions and therefore the mean equilibrium capital stock. Policy evaluation exercises therefore need to take account of these higher order terms.

Generalized empirical likelihood-based model selection criteria for moment condition models

This paper proposes model selection criteria (MSC) for unconditional moment models using generalized empirical likelihood (GEL) statistics. The use of GEL-statistics in lieu of J-statistics (in the spirit of Andrews, 1999, Econometrica 67, 543-564; and Andrews and Lu, 2001, Journal of Econometrics 101, 123-164) leads to an alternative interpretation of the MSCs that emphasizes the common information-theoretic rationale underlying model selection procedures for both parametric and semiparametric models. The result of this paper also provides a GEL-based model selection alternative to the information criteria-based nonnested tests for generalized method of moments models considered in Kitamura (2000, University of Wisconsin). The results of a Monte Carlo experiment are reported to illustrate the finite-sample performance of the selection criteria and their impact on parameter estimation

Precautionary Saving and Consumption Fluctuations

This paper uses the consumption Euler equation to derive a decomposition of consumption growth into four sources. These are new information and three sources of predictable consumption growth: intertemporal substitution, changes in the preferences for consumption, and incomplete markets for consumption in- surance. Using data on the expenditures of households, we implement the decom- position for the average growth rate of consumption expenditures on nondurable goods in the U.S. from the beginning of 1982 to the end of 1997. Incomplete markets for trading consumption in future states lead to statistically signiÞcant and countercyclical movements in expected consumption growth: consumption growth is expected to be higher when the unemployment rate is high. The eco- nomic importance of precautionary saving rivals that of the real interest rate, but the relative importance of each source of movement in the volatility of consump- tion is not precisely measured.

An analysis of federal delivery systems for early child development services.

Abstract not availabl

Ethics, Justice, and the Impact of COVID-19 on the Courts in Canada

Canadian courts have struggled with delay for decades. The advent of the COVID-19 pandemic added to an already difficult situation. Courts were required to take swift action, which they did. Despite this, they have faced criticism concerning the approach taken. I will argue that this criticism is not warranted and has more to do with the perceptions of the courts’ past performance than it has to do with their response to the pandemic. Regardless, the systemic delay in Canadian courts has become an issue of ethics which overshadows any success they have had in the current pandemic

Mindfully Organizing Collective Teacher Efficacy: A Case Study Of Efficacious Educator Teams

Collective teacher efficacy (CTE) has well documented positive effects on student outcomes (Goddard et al., 2017), teacher job satisfaction (Buonomo et al., 2020), and educator persistence (Guidetti et al., 2018) in the face of challenging tasks. Characterized by the collective belief in the group’s capability to successfully accomplish tasks associated with their professional practice (Donohoo, 2018), what influences group efficacy belief formation remains an underdeveloped area of academic and practical understanding (Tschannen-Moran et al., 2014). To better understand the influences that shape CTE beliefs, and how those influences contribute to the known sources of CTE, a multiple–case study design was used to conduct focus group interviews with four collectively efficacious elementary school-based educator teams. Affirmed within the findings of this study, an a priori conceptual link between the enabling conditions of CTE (EC-CTE) (Donohoo et al., 2020) and the five mindful organizing behaviors (Weick & Sutcliffe, 2015) was developed. Additionally, heedful interrelating (Weick & Roberts, 1993) was found to have a potential mediating role between the EC-CTE and mindful organizing behaviors, while psychological safety (Edmondson, 1999) was found to have a potential moderating role among all the conditions. Given the findings of four dynamic and interacting conditions that influence CTE beliefs, a complex system of CTE conditions is conceptualized, explained, and situated within the relevant literature