E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit

• Inflation, Nominal Portfolios, and Wealth Redistribution in Canada

  Staff Working Paper 2008-19 Césaire Meh, Yaz Terajima

  There is currently a policy debate on potential refinements to monetary policy regimes in countries with low and stable inflation such as the U.S. and Canada. For example, in Canada, a systematic review of the current inflation targeting framework is underway.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Inflation targets, Inflation: costs and benefits, Monetary policy framework, Sectoral balance sheet JEL Code(s): D, D3, D31, D5, D58, E, E3, E31, E5, E50

• Policy Coordination in an International Payment System

  Staff Working Paper 2008-17 James Chapman

  Given the increasing interdependence of both financial systems and attendant payment and settlement systems a vital question is what form should optimal policy take when there are two connected payment systems with separate regulators.

  Content Type(s): Staff research, Staff working papers Topic(s): Exchange rate regimes, Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E58, F, F3, F31, F33

• The Effects of a Disruption in CDSX Settlement on Activity in the LVTS: A Simulation Study

  Staff Discussion Paper 2008-7 Lana Embree, Kirby Millar

  The Large Value Transfer System (LVTS) for settling large payments, and CDSX for settling debt and equity trades, are two of the main settlement systems in Canada. They are closely linked; for example, at the end of the day the final CDSX payment obligations must settle on the Bank of Canada's books, with payments made […]

  Content Type(s): Staff research, Staff discussion papers Topic(s): Financial stability, Payment clearing and settlement systems JEL Code(s): E, E5, E58, G, G2, G21

• Price Level versus Inflation Targeting under Model Uncertainty

  Staff Working Paper 2008-15 Gino Cateau

  The purpose of this paper is to make a quantitative contribution to the inflation versus price level targeting debate. It considers a policy-maker that can set policy either through an inflation targeting rule or a price level targeting rule to minimize a quadratic loss function using the actual projection model of the Bank of Canada (ToTEM).

  Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy and uncertainty JEL Code(s): D, D8, D81, E, E5, E58

• Uncertainty, Inflation, and Welfare

  Staff Working Paper 2008-13 Jonathan Chiu, Miguel Molico

  This paper studies the welfare costs and the redistributive effects of inflation in the presence of idiosyncratic liquidity risk, in a micro-founded search-theoretical monetary model. We calibrate the model to match the empirical aggregate money demand and the distribution of money holdings across households, and study the effects of inflation under the implied degree of market incompleteness.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation: costs and benefits, Monetary policy framework JEL Code(s): E, E4, E40, E5, E50

• A Model of Tiered Settlement Networks

  Staff Working Paper 2008-12 James Chapman, Jonathan Chiu, Miguel Molico

  This paper develops a model of settlement system to study the endogenous structure of settlement networks, and the welfare consequences of clearing agent failure. The equilibrium degree of tiering is endogenously determined by the cost structure and the information structure.

  Content Type(s): Staff research, Staff working papers Topic(s): Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E58, G, G2, G21

• Credit, Asset Prices, and Financial Stress in Canada

  Staff Working Paper 2008-10 Miroslav Misina, Greg Tkacz

  Historical narratives typically associate financial crises with credit expansions and asset price misalignments. The question is whether some combination of measures of credit and asset prices can be used to predict these events.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Financial stability JEL Code(s): E, E5, G, G1, G10

• Sterilized Intervention in Emerging-Market Economies: Trends, Costs, and Risks

  Staff Discussion Paper 2008-4 Robert Lavigne

  The author examines recent trends in sterilized intervention among emerging-market economies, to determine the size and extent of this policy in relation to earlier periods of heavy reserve accumulation. He then analyzes whether the domestic costs and risks of substantial and prolonged sterilization are beginning to manifest themselves.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Exchange rate regimes, Financial stability, International topics JEL Code(s): E, E5, E52, F, F3, F31, O, O2, O24

• Welfare Effects of Commodity Price and Exchange Rate Volatilities in a Multi-Sector Small Open Economy Model

  Staff Working Paper 2008-8 Ali Dib

  This paper develops a multi-sector New Keynesian model of a small open economy that includes commodity, manufacturing, non-tradable, and import sectors. Price and wage rigidities are sector specific, modelled à la Calvo-Yun style contracts.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Exchange rate regimes, International topics JEL Code(s): E, E4, E5, E52, F, F3, F4

• Inflation Targeting and Price-Level-Path Targeting in the GEM: Some Open Economy Considerations

  Staff Working Paper 2008-6 Donald Coletti, René Lalonde, Dirk Muir

  This paper compares the performance of simple inflation targeting (IT) and price-level path targeting (PLPT) rules to stabilize the macroeconomy, in response to a series of shocks, similar to those seen in Canada and the United States over the 1983 to 2004 period.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Inflation and prices, Inflation: costs and benefits, Monetary policy framework JEL Code(s): C, C5, C51, C52, E, E1, E17, E3, E31, E5, E52