E - Macroeconomics and Monetary Economics
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Gaining Credibility for Inflation Targets
In this paper, I consider a simple model in which agents learn about the inflation target of a central bank over time by observing the policy instrument or inflation outcomes. Measuring credibility as the distance between the perceived target and the actual target, an increase in credibility is beneficial to the central bank because it brings the policy consistent with attaining the inflation target closer to that required to attain the output target. -
Testing for a Structural Break in the Volatility of Real GDP Growth in Canada
This study tests for a structural break in the volatility of real GDP growth in Canada following the methodology of McConnell and Quiros (1998). A break is found in the first quarter of 1991. -
How Rigid Are Nominal-Wage Rates?
This study examines the effect of nominal-wage rigidities on wage growth in Canada using a hazard model and micro data for union contracts. The hazard model is specified in a way that allows considerable flexibility in the shape of the estimated notional wage-change distribution. -
Downward Nominal-Wage Rigidity: Micro Evidence from Tobit Models
This paper uses Tobit models and data for union contracts to examine the extent of downward nominal-wage rigidity in Canada. To be consistent with important stylized facts, the models allow the variance of the notional wage-change distribution to be time-varying and test for menu-cost effects. -
The Zero Bound on Nominal Interest Rates: How Important Is It?
This paper surveys the literature on the zero bound on the nominal interest rate. It addresses questions ranging from the conditions under which the zero bound on the nominal interest rate might occur to policy options to avoid or use to exit from such a situation. We discuss literature that examines historical and country evidence, and literature that uses models to generate evidence on this question. -
Reactions of Canadian Interest Rates to Macroeconomic Announcements: Implications for Monetary Policy Transparency
In this study we statistically quantify the reactions of Canadian and U.S. interest rates to macroeconomic announcements released in Canada and in the United States. We find that Canadian interest rates react very little to Canadian macroeconomic news and are significantly affected by U.S. macroeconomic news, which indicates that international influences on the Canadian fixed-income markets are important. -
On the Nature and the Stability of the Canadian Phillips Curve
This paper empirically determines why, during the 1990s, inflation in Canada was consistently more stable than predicted by the fixed-coefficients Phillips curve. A time-varying-coefficient model, where all the parameters adjust simultaneously, shows that the behaviour of expectations was probably a major contributing factor. -
On Commodity-Sensitive Currencies and Inflation Targeting
Two aspects of the recent monetary history of Canada, Australia, and New Zealand stand out: the sensitivity of their dollars to prices of resource-based commodities, and inflation targeting. This paper explores various aspects of these phenomena. -
The Elements of the Global Network for Large-Value Funds Transfers
The author describes the various elements of the global payment network for large-value funds transfers (G-LVTN) in order to provide a convenient reference document intended for readers in the academic, legal, and financial communities.