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Home Policy Articles: Fiscal & Budgetary: Currency & Exchange Rates

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No Small Change: The Awkward Economics and Politics of North American Monetary Integration

This article by William B.P. Robson and David Laidler examines different options regarding the idea of monetary integration between Canada and the United States. The authors outline the arguments of several critics who believe that Canada’s current monetary order should be replaced by one based on the US dollar, particularly as the Canadian currency is doomed to disappear in “a world of large currency blocks.” Robson and Laidler propose an alternate direction, arguing that Canada has been relatively well served by its monetary policy.
http://www.cdhowe.org/pdf/commentary_167.pdf

Preserving Control: Canada and the International Market for Corporate Acquisitions

This article by Shay Aba and Jack M. Mintz focuses on the effect, or non-effect, of a declining Canadian dollar and how it pertains to company takeovers. Contrary to expectations, the authors find that a lower Canadian dollar does not necessarily lead to a drastic increase in foreign takeovers of Canadian companies, nor does it significantly alter the appetite of Canadian firms for foreign companies – despite a concomitant decrease in purchasing power.
http://www.cdhowe.org/pdf/aba_mintz_backgrounder.pdf

Productivity and the Dollar: Commodities and the Exchange Rate Connection

This article by David Laidler and Shay Aba opposes critics who would argue that Canada’s flexible exchange rate system has been “undermining the economy’s productivity performance.” This argument is based on the idea that Canada’s producers have relied on the declining value of the dollar rather than on improving their productivity to maintain their profits. According to Laidler and Aba, changing Canada’s system to a fixed exchange rate would not have fixed the situation but worsened it, as it would have brought deflation and recession. This, in turn, would have “made investment less attractive.”
http://www.cdhowe.org/pdf/commentary_158.pdf