Bank of Canada Review - Spring 2013

May 16, 2013
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This issue includes analysis of the unconventional monetary policies recently implemented by central banks, and also presents Bank research in two areas - the migration of labour between economic regions in Canada, and the asset-allocation and funding decisions for Canada’s foreign exchange reserves.

The Bank of Canada Review is published four times a year. Articles undergo a thorough review process. The views expressed in the articles are those of the authors and do not necessarily reflect the views of the Bank.

The contents of the Review may be reproduced or quoted, provided that the publication, with its date, is specifically cited as the source.
Content Type(s): Publications, Bank of Canada Review
May 16, 2013

Unconventional Monetary Policies: Evolving Practices, Their Effects and Potential Costs

Bank of Canada Review - Spring 2013 Lena Suchanek, Eric Santor
Following the recent financial crisis, major central banks have introduced several types of unconventional monetary policy measures, including liquidity and credit facilities, asset purchases and forward guidance. To date, these measures appear to have been successful. They restored market functioning, facilitated the transmission of monetary policy and supported economic activity. They have potential costs, however, including challenges related to the greatly expanded balance sheets of central banks and the eventual exit from these measures, as well as the vulnerabilities that can arise from prolonged monetary accommodation.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Financial markets, International topics, Monetary policy framework JEL Code(s): E, E5, E52, E58, E6, E65
May 16, 2013

Explaining Canada’s Regional Migration Patterns

Bank of Canada Review - Spring 2013 David Amirault, Daniel de Munnik, Sarah Miller
Understanding the factors that determine the migration of labour between regions is crucial for assessing the economy’s response to macroeconomic shocks and identifying policies that will encourage an efficient reallocation of labour. By examining the determinants of migration within Canada from 1991 to 2006, this article provides evidence that regional differences in employment rates and household incomes tend to increase labour migration, and that provincial borders and language differences are barriers to migration.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Econometric and statistical methods, Labour markets, Regional economic developments JEL Code(s): J, J6, J61, R, R2, R23
May 16, 2013

Modelling the Asset-Allocation and Liability Strategy for Canada’s Foreign Exchange Reserves

Bank of Canada Review - Spring 2013 Francisco Rivadeneyra, Jianjian Jin, Narayan Bulusu, Lukasz Pomorski
The Bank of Canada recently developed an asset-liability-matching model to aid in the management of Canada’s foreign exchange reserves. The model allows policy-makers at the Bank and the Department of Finance to analyze asset-allocation and funding-mix decisions by quantifying both the risk-return and liquidity trade-offs for the assets, as well as the risk-cost trade-offs of the funding liabilities.
Content Type(s): Publications, Bank of Canada Review articles Topic(s): Debt management, Foreign reserves management JEL Code(s): F, F3, F31, G, G1, G11, G18