Finance committee  Well, we begin the analysis with, we believe that the U.S. economy is gathering momentum and so it's entirely appropriate that there'll be, in prospect, some adjustment to monetary policy. The tapering, which last year caused what they called a tapering tantrum in financial markets, is now much better understood.

Finance committee  That reference to private demand is an economist's euphemism. It was first called animal spirits by our old economist Keynes. What we know is that there's always this unexplained layer of macro decision-making in an economy. It's a bit like a herd effect: everybody is optimistic, so everybody gets optimistic.

Finance committee  In this matter, the Bank of Canada acts as an adviser to the government. We manage the government's debt stock. In this situation, investors clearly want to have access to longer terms on the market. At the same time, that can allow the government to minimize the cost of its debt over a long period.

Finance committee  That is a very difficult question. The debt stock is high. The government must issue bonds in such a way as to meet demand and maintain cash flow in all areas of the interest rate curve. Many factors come into play in this recommendation. It is very complex. It is important to consider market conditions and the needs of the government, while bearing in mind the bigger picture of debt stock.

Finance committee  I really don't.... Well, on the margin, the answer to your question is yes. A 10% decline in the dollar makes certain bits of machinery that people import more expensive. But the dollar remains, in the historical sense, quite high relative to where we've been. Relative to, let's say, five to ten years ago, that equipment is quite a bargain compared with what it was when the Canadian dollar was much lower.

Finance committee  Well, I don't know if anybody really tracks that in the way we describe. It's something that could be investigated. If it were possible to bring those data sets to the table, we would be happy to analyze them.

Finance committee  I've been an economist for over 30 years, and I just love data, so if someone were to give me even more data on housing, I would eat them up and analyze them. We do have excellent data as it is. We believe we understand it, but there's no economic situation that couldn't be made better by having more data.

Finance committee  That's right.

Finance committee  Well, I would recommend the speech I gave in Halifax, where we did talk about that in detail. Very quickly, the short answer is yes. Those drivers come from population growth and workforce growth, and that is easing back as we age. Productivity is a much more complex thing that comes from the mix of what we do and how much we invest in it, so we do have the opportunity to have an offset.

Finance committee  Yes, as we get farther out there, we can say with some certainty.... The thing about demographics is we know with certainty that next year we will be one year older. It sounds trite, but putting those implications through an economic model is quite telling. It means the workforce out there actually begins to shrink in a way that means our trend line and growth are gradually slowing down to about that 2% level.

Finance committee  Yes, in fact Canadians have managed to continue to build their balance sheets through this. We know, just as a casual observer, that Canada managed the crisis better than most countries, although, of course, we had a down cycle, but it was not as big as other countries’. As well, as many households own a home, we know the average price of homes has gone up and so there's been a wealth effect from this.

Finance committee  I would say that in a sense there's a degree of truth in all of that analysis, as usual. It's important that we start there.

Finance committee  Many of the metrics that one uses to decide whether or not a market is overvalued may be quite relevant for what we would say are normal times. Then immediately one realizes that we are not in normal times. In fact, our response to the crisis has been one in which interest rates went to extraordinarily low levels, and part of that policy prescription is that people will buy more houses, or buy them sooner in their life cycle.

Finance committee  Yes, there is a risk, and we're well acquainted with the risks, if I can classify them as low for long. So the possibility that there will be financial bubbles or unsustainable moves in housing, or increased debt levels, which are not sustainable long term, all those things come as a bundle, and we call them low for long risks.

Finance committee  Yes. As I said in my introduction, the competitiveness equation includes a lot of elements. Anything that costs a company money, whether it's a form of taxation or red tape or logistical connections, all of those things, if they're made better, then of course contribute to the overall competitiveness of the sector.