Can the Canadian International Investment Position Stabilize a Slowing Economy?

Maxime Leboeuf and Chen Fan

Staff Analytical Notes from Bank of Canada

Abstract: In this note, we find that valuation effects can act as an important stabilizer, strengthening Canada’s net external wealth when its economic outlook worsens relative to that of other countries. This is particularly true when the Canadian dollar depreciates against the US dollar and the Canadian outlook worsens compared with that of the United States. Such was the case during the 2014–15 oil price shock, where valuation effects boosted Canada’s net international investment position (NIIP) by 30 per cent of GDP.

Keywords: Balance of payments and components; International financial markets (search for similar items in EconPapers)
JEL-codes: F F2 F21 F3 F32 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsan:17-14

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