The Performance of Service Industries in Canada: A Real Value Analysis

The performance of service industries in Canada has been lower than that of good industries over the last four decades, with noticeable exceptions such as for railways and telecommunication carriers. Service industries were less economically (and technically) efficient in that they generated less output value (quantity) per hour worked (level and growth) or per combined unit of labour and capital (multifactor productivity growth) than good industries. The relative output price of services declined slightly over time compared with goods. At the disaggregated level, changing relative output prices were substantial and proved to be an important factor explaining the relative satisfactory economic performance of many service industries despite their low technical performance. Nevertheless, the output share of service industries increased over that period, sustained, mainly, by the growing recourse of all firms to outsourcing of services.     

Bank Monitoring and Environmental Risk

Abstract:  Loan announcement effects for 152 Canadian companies are examined to investigate the efficiency of monitoring by banks facing lender environmental liability. Market reaction to the announcement of bank debt to 'environmental' firms is more positive and significant than for 'non-environmental' firms and, for firms in industries with a higher likelihood of experiencing spill events, is more positive and significant, reinforcing earlier results that establish a relationship between specific loan/borrower characteristics and announcement period excess returns and providing further evidence on the 'uniqueness' of bank loans by demonstrating the superior ability of banks to monitor corporate borrowers exposed to environmental liability.     

Gender differences within early stage and established small enterprises: An exploratory study

This paper examines 2 years of data from GEM Canada in order to develop new insights into the factors that contribute to the performance outcomes of female enterprises and how these factors are affected by the firm’s stage of development. The analysis encompasses both personal and organizational characteristics and assesses their association with selected performance measures at the early stage as well as at the established phase of development. The findings indicate that the greater propensity of men to pursue business growth and earnings can be attributed to marital status (live with a partner) and the expected depth of the ownership team. Moreover, the performance outcomes for male entrepreneurs are influenced by a relatively wide range of variables, with business demographics being more prominent than for the female enterprises. For both genders, the mix of relevant underlying factors varies as the venture progresses along the ‘nascent-new-established’ continuum.     

Playing the synthesizer with Canadian data: Adding polls to a structural forecasting model

Election forecasting has become a fixture of election campaigns in a number of democracies. Structural modeling, the major approach to forecasting election results, relies on ‘fundamental’ economic and political variables to predict the incumbent’s vote share usually a few months in advance. Some political scientists contend that adding vote intention polls to these models—i.e., synthesizing ‘fundamental’ variables and polling information—can lead to important accuracy gains. In this paper, we look at the efficiency of different model specifications in predicting the Canadian federal elections from 1953 to 2015. We find that vote intention polls only allow modest accuracy gains late in the campaign. With this backdrop in mind, we then use different model specifications to make ex ante forecasts of the 2019 federal election. Our findings have a number of important implications for the forecasting discipline in Canada as they address the benefits of combining polls and ‘fundamental’ variables to predict election results; the efficiency of varying lag structures; and the issue of translating votes into seats.     

The long-run effects of the real exchange rate on employment and wages in Canadian manufacturing

ABSTRACT

The literature on real exchange rate effects on the labour market is dominated by short-run analysis showing that there is heterogeneity in the responses of firms or industries to a real exchange rate shock. Analysing data on Canadian manufacturing industries, I conclude that there is a common long-run equilibrium across all manufacturing industries controlling for their openness to trade after varying adjustments to a real exchange rate shock have taken place. This conclusion is important from the perspective of policy making because it helps to form expectations about the effects of a real exchange rate movement on the labour market. The results suggest that real appreciation leads to economically significant reductions in employment in manufacturing in the long run. Real wages decrease in industries that are highly engaged in international trade and somewhat increase in industries that are relatively closed to international trade. Both employment and real wages converge quickly to the long-run equilibrium.     

Canada's Housing Bubble Story: Mortgage Securitization,the State,and the Global Financial Crisis

Canada's experience during and after the financial crisis appears to distinguish it from its international peers. Canadian real estate sales and values experienced record increases since the global financial crisis emerged in 2008, rather than declines, and Canada did not witness any bank failures. The dominant trope concerning Canada's financial and housing markets is that they are sound, prudent, appropriately regulated and ‘boring but effective’. It is widely assumed that Canadian banks did not need, nor receive, a ‘bailout’, that mortgage lending standards remained high, and that the securitization of mortgages was not widespread. The truth, however, does not accord with this mainstream view. In fact, the Canadian financial and housing markets reveal marked similarities with their international peers. Canada's banks needed, and received, a substantial ‘bailout’, while federal policies before and after the financial crisis resulted in the massive growth of mortgage securitization and record household indebtedness. This article documents the growth of Canada's housing bubble, the history of mortgage securitization, and of government policies implemented before and after the crisis. Instead of making the Canadian financial and housing sectors more resilient and sustainable, the outcomes of state responses are best understood as regressively redistributive.     

Impacts of trade liberalization in Canada's supply managed dairy industry

Trade is an integral part of the Canadian economy. The main institutional drivers governing trade are bilateral and multilateral agreements outlining permissible trade distorting measures. Since its inception in 1972, Canada's supply management system has remained protected throughout trade negotiations. The system appears, by any economic measure, to be having an increasingly disproportional influence in recent trade negotiations. However, trade agreements serve not only to maximize social surplus, but also to maximize some measure of political welfare. Canada has recently negotiated three prominent trade agreements: the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) came into effect in the latter part of 2017; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect at the end of 2018; and the Canada-United States-Mexico Agreement (CUSMA) could come into effect in 2020. Collectively, these agreements have guaranteed increased market access for fresh and processed dairy products. We build a spatial partial equilibrium model of the Canadian dairy industry consisting of three regions and 10 commodities to assess the individual and cumulative effect of these trade agreements. We pay particular attention to the institutional drivers within today's dairy sector: milk protein isolates; component pricing, including Class 7; and differential demand growth. We find that the aggregate impacts are: (a) a 1.4% decrease in the marginal retail price; (b) a 4.8% decrease in the blended producer price; and (c) an overall increase in social welfare of 7.8%. Worth noting, the decrease in producer surplus varies from 0.7% in the western region to 1.5% in Ontario. Our results may be relevant to future negotiations as well as the publicly promised compensation package for dairy producers.     

Subterranean Commodification: Informal Housing and the Legalization of Basement Suites in Vancouver from 1928 to 2009

This article draws on Margaret Radin's theorization of ‘contested commodities' to explore the process whereby informal housing becomes formalized while also being shaped by legal regulation. In seeking to move once‐informal housing into the domain of official legality, cities can seldom rely on a simple legal framework of private‐law principles of property and contract. Instead, they face complex trade‐offs between providing basic needs and affordability and meeting public‐law norms around living standards, traditional neighbourhood feel and the environment. This article highlights these issues through an examination of the uneven process of legal formalization of basement apartments in Vancouver, Canada. We chose a lengthy period—from 1928 to 2009—to explore how basement apartments became a vital source of housing often at odds with city planning that has long favoured a low‐density residential built form. We suggest that Radin's theoretical account makes it possible to link legalization and official market construction with two questions: whether to permit commodification and how to permit commodification. Real‐world commodification processes—including legal sanction—reflect hybridization, pragmatic decision making and regulatory compromise. The resolution of questions concerning how to legalize commodification are also intertwined with processes of market expansion.     

Evidence of Place: Becoming a Region in Rural Canada

The purpose of this article is to investigate whether place is emerging in practice as a critical dimension in the development of Canadian rural regions. Recently, Jones and Paasi set regional researchers the task of better understanding how regions ‘become'. In researching this question, we are particularly interested in the definition and expression of place‐based identity as a mobilizing force for regionalism. Our findings suggest that, while identity plays a critical role in fostering regional development processes, it is either too emergent or actively resisted within our research sites to be a significant force for place‐based regional development.     

Real Existing Regionalism: The Region between Talk,Territory and Technology

In this essay, we propose the notion of real existing ‘lived’ regionalism as a rejoinder to the normative and ideological debates around new regionalism. Regional forms have shown little convergence in this age of globalized regionalization. Instead of an ideational construct or set of predictable practices, we argue that regionalism is a contested product of discourses (talk), territorial relationships (territory) and technologies (material and of power). The concept of real existing regionalism confronts the tensions between the discursive constructions and normative interventions characterizing much current regionalist debate and the territorial politics and technologies reflecting, generating and directing new state spatial strategic choices. The essay demonstrates the utility of the real existing regionalism framework through an analysis of the greenbelt, transport planning and post‐ suburbanization in Southern Ontario. We argue that regulatory institutions capture the Toronto region in a mix of rhetorical and technological change that complies with neither preconceived notions of regionalization nor the pessimism of total regional dysfunctionality. Rather, the lived experience of regionalization illuminates the emergent assemblages, multiplicity of everyday flows and ongoing multiscalar negotiations of diverse communities that produce the real existing region.