E - Macroeconomics and Monetary Economics

• A Band-Aid Solution to Inflation Targeting

  Staff Working Paper 1997-11 Robert Amano, Richard Black, Marcel Kasumovich

  This paper reviews selectively the literature on exchange rate target zones and corresponding methodologies and examines whether they can be used to analyse the inflation-control problem.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets JEL Code(s): E, E3, E31, E5, E50

• The Structure of Interest Rates in Canada: Information Content about Medium-Term Inflation

  Staff Working Paper 1997-10 Jim Day, Ron Lange

  This paper examines the relationship between the term structure of interest rates and future changes in inflation for Canada using a newly constructed par-value yield series. The main conclusion of the empirical work is that the slope of the nominal term structure from 1- to 5-year maturities is a reasonably good predictor of future changes in inflation over these horizons.

  Content Type(s): Staff research, Staff working papers Topic(s): Interest rates, Monetary and financial indicators JEL Code(s): E, E4, E43

• Mesures du taux d'inflation tendanciel

  Staff Working Paper 1997-9 Thérèse Laflèche

  In this paper, the author calculates new measures of the trend inflation rate using changes in the components of total CPI; the hypothesis is that extreme fluctuations in certain prices reflect temporary supply shocks rather than any basic price trend.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices JEL Code(s): E, E3, E31

• Implementation of Monetary Policy in a Regime with Zero Reserve Requirements

  Staff Working Paper 1997-8 Kevin Clinton

  Monetary policy can be implemented effectively without reserve requirements as long as cost incentives ensure a predictable demand for settlement balances. A central bank can then achieve the level of short-term interest rates that it desires, using market-oriented instruments only.

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

• Monetary Shocks in the G-6 Countries: Is There a Puzzle?

  Staff Working Paper 1997-7 Ben Fung, Marcel Kasumovich

  This paper attempts to reduce the uncertainty about the dynamics of the monetary transmission mechanism. Central to this attempt is the identification of monetary policy shocks. Recently, VAR approaches that use over-identifying restrictions have shown success in isolating such shocks.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, International topics, Monetary policy transmission JEL Code(s): E, E5, E52, E58

• A Comparison of Alternative Methodologies for Estimating Potential Output and the Output Gap

  Staff Working Paper 1997-5 Chantal Dupasquier, Alain Guay, Pierre St-Amant

  In this paper, the authors survey some of the recent techniques proposed in the literature to measure the trend component of output or potential output. Given the reported shortcomings of mechanical filters and univariate approaches to estimate potential output, the paper focusses on three simple multivariate methodologies: the multivariate Beveridge-Nelson methodology (MBN), Cochrane's methodology (CO), and the structural VAR methodology with long-run restrictions applied to output (LRRO).

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods JEL Code(s): C, C1, C13, C5, C52, E, E5, E52

• The Liquidity Trap: Evidence from Japan

  Staff Working Paper 1997-4 Isabelle Weberpals

  Japanese economic activity has been stagnant since the collapse of the speculative asset-price bubble in 1990, despite highly expansionary monetary policy which has brought interest rates down to record low levels. Although several reasons have been put forward to explain the sustained weakness of the Japanese economy, none is more intriguing from the viewpoint of a central bank than the possibility that monetary policy had been largely ineffective because the Japanese economy entered a Keynesian "liquidity trap."

  Content Type(s): Staff research, Staff working papers Topic(s): International topics, Recent economic and financial developments JEL Code(s): E, E4, E42, E5, E51, E52

• La courbe de Phillips au Canada : un examen de quelques hypothèses

  Staff Working Paper 1997-3 Jean-François Fillion, André Léonard

  This study, which draws on a variety of research on price dynamics in Canada, examines some hypotheses that might explain the poor quality of recent inflation forecasts based on the conventional Phillips curve.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Inflation targets JEL Code(s): C, C5, C52, E, E3, E31

• Do Mechanical Filters Provide a Good Approximation of Business Cycles?

  Technical Report No. 78 Alain Guay, Pierre St-Amant

  In this paper, the authors examine how well the Hodrick-Prescott filter (HP) and the band-pass filter recently proposed by Baxter and King (BK) extract the business-cycle component of macroeconomic time series.

  Content Type(s): Staff research, Technical reports Topic(s): Econometric and statistical methods JEL Code(s): C, C5, C52, E, E3, E32

• A Modified P*-Model of Inflation Based on M1

  Staff Working Paper 1996-15 Joseph Atta-Mensah

  This paper examines the performance of M1 in an indicator-model of inflation over time horizons as long as 16 quarters into the future.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models JEL Code(s): E, E3, E37