Robert Lafrance

The Turning Black Tide: Energy Prices and the Canadian Dollar

This paper revisits the relationship between energy prices and the Canadian dollar, using an equation first developed by Amano and van Norden (1995). They found evidence of a negative relationship between these two variables, such that higher real energy prices led to a depreciation of the Canadian dollar. Based on structural break tests, we find a break point in the sign of this relationship, which changes from negative to positive in the early 1990s. The timing of the break is consistent with major changes in Canadas energy policies and in energy-related cross-border trade and investment.

The Canadian-US dollar exchange rate: A test of alternative models for the seventies

Abstract Three basic models of bilateral exchange-rate determination are evaluated on the basis of the Canadian experience in the 1970s. We examine wealth effects and incorporate consistent expectations in the traditional models. Based on reduced-form equations, empirical results reject a simple monetary approach and the stickly-price asset market model but concur with a version of the stock-flow model of exchange-rate determination.