Macroeconomics Archives - Record Currency Macro

Terminating NAFTA: What would the impact on Canada be?

29th January 2018/0 Comments/in Macroeconomics /by Joe Spearing

• As NAFTA negotiations become increasingly fraught, the risk of a complete termination by US President Donald Trump is increasing
• The long-run impact of such a termination is likely to be limited, based on the MFN tariffs the US could apply
• The most likely impact would be in terms of the real economy, as the shock generated would hit consumption, spook investment and delay the Bank of Canada’s hiking cycle.
• To investigate the magnitude of this effect, we model the impact on real economic variables and interpret the impact on the Canadian dollar. Our results suggest that a 6% depreciation of the Canadian dollar against the US dollar could be justified.

The divisible labour market? Thoughts on Haldane’s speech on Labour Markets

5th July 2017/0 Comments/in Macroeconomics /by Joe Spearing

The Bank of England’s chief economist Andy Haldane suggested recently that changes in labour market structure in the UK have led to a flattening of the Phillips Curve
In this blog, we discuss the plausibility of this argument applied to a global context over a longer time horizon

Why the U.S. labour market is not as tight as it looks

12th June 2017/0 Comments/in Macroeconomics, United States /by Jeremy Chalder, CFA

Does the collapse in the participation rate represent slack, or just demographics? How many can be brought back in to the labour force? We present a detailed dissection of the American population ‘not in employment’, and the reality of getting them back to work.

Where are we in the dollar cycle?

20th September 2016/0 Comments/in Currency, Macroeconomics, Monetary Policy, United States /by Andrew Bloomfield, CFA

The US dollar is at an inflection point. Can the dollar’s cycle continue in the face of convergent economic fundamentals and central bank coordination?

What next if negative rates fail

18th February 2016/2 Comments/in Currency, Macroeconomics, Monetary Policy /by Andrew Bloomfield, CFA

In response to almost a decade of QE and with little discernible effect, central bankers have resorted to negative interest rates. What is the zero lower bound and will below zero rates have the desired effect?
If negative interest rates fail to halt deflationary momentum, could more extreme options such as ‘helicopter money’ be a viable next step?

Labour Share of GDP and the Balassa-Samuelson Effect

11th December 2015/0 Comments/in Macroeconomics /by Andrew Bloomfield, CFA

• The labour share of GDP appears to be an important catalyst in the workings of the Balassa-Samuelson effect.
• Understanding it can allow us to better infer currency valuations and the rate at which productivity growth translates into exchange rate appreciation.