Posts
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Broker Routing Decisions in Limit Order Markets
The primary focus of this paper is to study conflict of interest in the brokerage market. Brokers face a conflict of interest when the commissions they receive from investors differ from the costs imposed by different trading venues. -
Inventories, Markups, and Real Rigidities in Menu Cost Models
Real rigidities that limit the responsiveness of real marginal cost to output are a key ingredient of sticky price models necessary to account for the dynamics of output and inflation. We argue here, in the spirit of Bils and Kahn (2000), that the behavior of marginal cost over the cycle is directly related to that of inventories, data on which is readily available. -
August 23, 2011
How People Think and How It Matters
In his speech entitled “How People Think and How it Matters,” delivered to the Canadian Association for Business Economics, Deputy Governor Jean Boivin reviews various ways people form expectations and how these affect monetary policy. -
May 23, 2003
The Bank of Canada: Moving Towards Transparency
During the 1990s the Bank of Canada made several changes that transformed its conduct of monetary policy. In the 1960s and 1970s, policy decisions were made in an environment characterized by instrument opaqueness and goal opaqueness, which tended to shield the Bank's operations from scrutiny and accountability. Since the 1970s the Bank has moved towards transparency and openness by rejecting multiple policy instruments and adopting a single, well-defined goal of inflation control. A recent survey has shown that the Bank of Canada is in the middle range of central banks with regard to its transparency and has lost points for not publishing the forecasts that shape its policy or the minutes and voting records of its governing body. Chant suggests that the public has benefited significantly from the changes the Bank has made, but that it should continue to support research on the benefits of low and stable inflation and continually inform other policy-makers and the public of the results. -
July 17, 2003
Release of the Monetary Policy Report Update
Today, we released our Update to the April Monetary Policy Report. The Update reviews economic and financial trends in the context of Canada's inflation-control strategy. -
Credibility, Flexibility and Renewal: The Evolution of Inflation Targeting in Canada
In 1991, Canada became the second country to adopt an inflation target as a central pillar of its monetary policy framework. The regime has proven much more successful than initially expected, both in achieving price stability and in stabilizing the real economy against a wide range of shocks. -
Short-Term Forecasting of the Japanese Economy Using Factor Models
While the usefulness of factor models has been acknowledged over recent years, little attention has been devoted to the forecasting power of these models for the Japanese economy. In this paper, we aim at assessing the relative performance of factor models over different samples, including the recent financial crisis. -
Composite Likelihood Estimation of an Autoregressive Panel Probit Model with Random Effects
Modeling and estimating persistent discrete data can be challenging. In this paper, we use an autoregressive panel probit model where the autocorrelation in the discrete variable is driven by the autocorrelation in the latent variable. In such a non-linear model, the autocorrelation in an unobserved variable results in an intractable likelihood containing high-dimensional integrals. -
Comparing Forward Guidance and Neo-Fisherianism as Strategies for Escaping Liquidity Traps
What path should policy-makers select for the nominal rate when faced with a liquidity trap during which the effective lower bound binds?