The propagation of U.S. shocks to Canada: Understanding the role of real financial linkages

Kimberly Beaton, René Lalonde and Stephen Snudden

Canadian Journal of Economics, 2014, vol. 47, issue 2, 466-493

Abstract: This paper examines the role of financial frictions in affecting the transmission of U.S. real and financial shocks to Canada using a dynamic stochastic generalequilibrium model with an active banking sector and financial frictions. We find that the U.S. banking and interbank markets can be a potentially important source of variability of Canadian output and inflationconsistent with the financial crisis. The presence of both the demand and the real supply sides of credit in the model help to capture the stylized facts of both the domestic and the international business cycles.

JEL-codes: F36 F44 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: The propagation of U.S. shocks to Canada: Understanding the role of real financial linkages (2014)
Working Paper: The Propagation of U.S. Shocks to Canada: Understanding the Role of Real-Financial Linkages (2010)
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