ECON 3150 Study Guide - Midterm Guide: South African Rand, South Korean Won, Canadian Airlines
13 Mar 2013
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In 2003, jeffrey rubin predicted that if the canadian dollar appreciated to ussh. 75, canada would slip into a recession. The canadian dollar appreciated well above this level over the next few years, and the canadian economy continued to grow. Aggregated demand depends on more than just exchange rate. Canadian economy growing at time of prediction. Negative impacts on exports and aggregate demand would have to be large enough to offset: appreciation likely reduced rate of growth of canadian economy but not sufficiently growth of economy to push canada into recession. Us economy growing positive spillover effect into canada. Resource boom resources priced in us dollars so no negative impact because of: profits in canadian dollars for canadian producers lower because of appreciation appreciation but offset by higher prices for resources. Canadian dollar may not have appreciated against other currencies: oil is traded and priced in us dollars.
