November 20, 2018
Fiscal policy
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Non-Performing Loans, Fiscal Costs and Credit Expansion in China
This paper studies how the credit expansion policy pursued by the Chinese government in an effort to stimulate its economy in the post-crisis period affects bank–firm loan contracts and the macroeconomy. We build a structural model with financial frictions in which the optimal loan contract reflects the trade-off between leverage and the probability of default. -
September 8, 2018
Investing in Monetary Policy Independence in a Small Open Economy
Governor Poloz discusses policies that can help central banks keep the ability to pursue independent monetary policy in a financially integrated global economy. -
Time-Consistent Management of a Liquidity Trap with Government Debt
This paper studies optimal discretionary monetary and fiscal policy when the lower bound on nominal interest rates is occasionally binding in a model with nominal rigidities and long-term government debt. At the lower bound it is optimal for the government to temporarily reduce debt. -
Sources of Borrowing and Fiscal Multipliers
This paper finds that debt-financed government spending multipliers vary considerably depending on the location of the debt buyer. In a sample of 33 countries, we find that government spending multipliers are larger when government purchases are financed by issuing debt to foreign investors (non-residents), compared with when government purchases are financed by issuing debt to home investors (residents). -
February 15, 2018
Anchoring Expectations: Canada’s Approach to Price Stability
Deputy Governor Lawrence Schembri examines the success of the Bank’s monetary policy framework and explains the review being undertaken before its renewal in 2021.