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This paper builds a Bayesian VAR estimation model of growth for Canada, by focusing specifically on the role of external and domestic financial indicators, including credit conditions. A variance decomposition shows that financial conditions explain one-third of the total variability in Canada's real GDP growth, although changes in U.S. real GDP growth still account for a larger share of volatility in Canadian growth. A macro-financial conditions index built from the VAR's impulse responses shows that U.S. real GDP growth and lending standards will increasingly bear on Canada's growth, implying that a normalization of the U.S. economic and financial conditions is key for a sustained recovery in Canada.

Canada -- Economic conditions -- 1991- -- Econometric models. --- Economic forecasting -- Canada -- Econometric models. --- Financial crises -- Canada -- Econometric models. --- Global Financial Crisis, 2008-2009. --- Global Economic Crisis, 2008-2009 --- Subprime Mortgage Crisis, 2008-2009 --- Financial crises --- Econometrics --- Foreign Exchange --- Investments: General --- Macroeconomics --- Money and Monetary Policy --- General Financial Markets: General (includes Measurement and Data) --- Energy: Demand and Supply --- Prices --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Currency --- Foreign exchange --- Investment & securities --- Econometrics & economic statistics --- Monetary economics --- Real effective exchange rates --- Treasury bills and bonds --- Oil prices --- Vector autoregression --- Domestic credit --- Government securities --- Credit --- United States --- Economic forecasting --- Econometric models. --- Canada --- Economic conditions