The Ill Wind that Blows from Europe: Implications for Canada's Economy
Bibliographic record
Abstract
Speculation about the consequences of a break-up of the eurozone, a worsening sovereign debt crisis or a prolonged recession in the European Union have all in recent years made the headlines. At first glance, the effect that such events might have on the Canadian macroeconomy might appear small. After all, Canada’s trade in goods and services and financial flows to and from the euro area are dwarfed by our economic relationship with the United States. Significant spillover effects, however, likely would arise out of any major economic or financial shock originating from the globe’s largest economic block (as measured by gross domestic product, GDP). The sovereign debt crisis in the eurozone exposed major fault lines in the economic stability of the common currency area. The indirect exposure of Canadian banks – and of the Canadian economy more generally – from a eurozone economic shock ought to represent a pressing source of concern for Canada’s policymakers.The continued uncertain outlook for the global and US economy also suggests that there is a real danger of another “perfect storm” such as the one that affected the world economy in 2008 and 2009. Canada might not escape next time around with only a short-lived recession, nor is it a given that its financial sector would emerge largely unscathed, notwithstanding Canada’s reputation for the quality of its financial regulation and supervision. This Commentary estimates a small macroeconomic model for Canada that explicitly incorporates financial sector influences. Then, foreign shocks with real and financial elements from the eurozone and the United States are added to the model to investigate the potential for spillover effects. The study also considers some counterfactuals, by imagining a large, negative and permanent economic shock from the eurozone, and compares the results with estimates based on observed data.The Commentary concludes that negative shocks from the real and financial sectors of the US and eurozone economies do spillover into the Canadian economy. Clearly, US shocks dominate, but eurozone shocks cannot be ignored. Counterfactual experiments suggest that, under eurozone worst-case scenarios, Canada’s economy would suffer a substantial drop of almost 8 percent in real GDP after two and a half years.
Fetched live from OpenAlex and de-inverted. Abstracts are not stored in this database: the inverted indexes are 8.6 GB of the frame’s 9.3 GB of text, and the host has 13 GB free.
How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.001 | 0.005 |
| Meta-epidemiology (narrow) | 0.001 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.001 |
| Bibliometrics | 0.001 | 0.002 |
| Science and technology studies | 0.009 | 0.002 |
| Scholarly communication | 0.008 | 0.002 |
| Open science | 0.003 | 0.001 |
| Research integrity | 0.003 | 0.003 |
| Insufficient payload (model declined to judge) | 0.009 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".