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

• Real Effects of Price Stability with Endogenous Nominal Indexation

  Staff Working Paper 2009-16 Césaire Meh, Vincenzo Quadrini, Yaz Terajima

  We study a model with repeated moral hazard where financial contracts are not fully indexed to inflation because nominal prices are observed with delay as in Jovanovic & Ueda (1997).

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Financial markets, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E2, E21, E3, E31, E4, E44, E5, E52

• Heterogeneous Beliefs and Housing-Market Boom-Bust Cycles in a Small Open Economy

  Staff Working Paper 2009-15 Hajime Tomura

  This paper introduces heterogeneous beliefs among households in a small open economy model for the Canadian economy. The model suggests that simultaneous boom-bust cycles in house prices, output, investment, consumption and hours worked emerge when credit-constrained mortgage borrowers expect that future house prices will rise and this expectation is neither shared by savers nor realized ex-post.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Financial stability, Inflation targets JEL Code(s): E, E4, E44, E5, E52

• Optimal Policy under Commitment and Price Level Stationarity

  Staff Working Paper 2009-8 Gino Cateau

  This paper proposes a simple analytical method to determine the stationarity of an unnormalized variable from the solution to a normalized model i.e. a model whose variables must be expressed in relative terms or must be differenced for a solution to exist.

  Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy framework JEL Code(s): E, E5, E52, E58

• Are Commodity Prices Useful Leading Indicators of Inflation?

  Staff Discussion Paper 2009-5 Calista Cheung

  Commodity prices have increased dramatically and persistently over the past several years, followed by a sharp reversal in recent months. These large and persistent movements in commodity prices raise questions about their implications for global inflation. The process of globalization has motivated much debate over whether global factors have become more important in driving the […]

  Content Type(s): Staff research, Staff discussion papers Topic(s): Business fluctuations and cycles, Economic models, Inflation and prices, International topics, Monetary policy transmission JEL Code(s): E, E3, E5, E52, E58

• Emerging Asia's Impact on Food and Oil Prices: A Model-Based Analysis

  Staff Discussion Paper 2009-3 René Lalonde, Philipp Maier, Dirk Muir

  The authors explore the usefulness of macroeconomic models in analyzing global economic developments by examining movements in commodity prices between July 2007 and July 2008. They use the Bank of Canada's version of the Global Economy Model and investigate the longer-term outlook for commodity prices by constructing two different, globally consistent, scenarios for emerging Asia.

  Content Type(s): Staff research, Staff discussion papers Topic(s): International topics, Recent economic and financial developments JEL Code(s): E, E3, E30, E5, E50, E58, E6, E60

• Canada and the IMF: Trailblazer or Prodigal Son?

  Staff Discussion Paper 2009-1 Michael Bordo, Lawrence L. Schembri, Tamara Gomes

  Canada played an important role in the postwar establishment of the International Monetary Fund (IMF), yet it was also the first major member to challenge the orthodoxy of the BrettonWoods par value system by abandoning it in 1950 in favour of a floating, market-determined exchange rate.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Exchange rate regimes, Exchange rates, Monetary policy framework JEL Code(s): E, E5, E52, E58, F, F4, F41, F5, F55, N, N7, N72

• Monetary Policy Lag, Zero Lower Bound, and Inflation Targeting

  Staff Working Paper 2009-2 Shin-Ichi Nishiyama

  Although the concept of monetary policy lag has historical roots deep in the monetary economics literature, relatively little attention has been paid to the idea. In this paper, we build on Svensson's (1997) inflation targeting framework by explicitly taking into account the lagged effect of monetary policy and characterize the optimal monetary policy reaction function both in the absence and in the presence of the zero lower bound on the nominal interest rate.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets, Monetary policy framework, Monetary policy implementation JEL Code(s): C, C6, C63, E, E5, E52, E58