This paper analyzes the relationship between the current account deficit in Canada and the public sector deficit. The hypothesis that the public sector deficit is a major determinant of the current account deficit in the U.K. has become known as the New Cambridge approach to the balance of...

This paper clarifies some issues involved in choosing monetary instruments by the Bank of Canada. The analysis generalizes Poole's model and considers the effect on income stability of controlling the interest rate, bank reserves or the exchange rate. The conclusions support using the interest...