Posts

• What Does Downward Nominal-Wage Rigidity Imply for Monetary Policy?

  Staff Working Paper 1997-13 Seamus Hogan

  A recent paper has suggested there might be a trade-off between inflation and unemployment at low inflation rates and this has led some economists to recommend that Canada increase its inflation rate.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets, Monetary policy framework, Monetary policy transmission JEL Code(s): C, C5, C52, E, E2, E24, E5, E50
• May 30, 1997

  Flexible Exchange Rates in a World of Low Inflation

  Remarks Gordon Thiessen FOREX '97 Conference Toronto, Ontario

  There is a good deal of discussion these days about Economic and Monetary Union (EMU) in Europe - about the benefits and difficulties of organizing such a union. However, today I would like to examine a somewhat different issue, one that is at the other end of the spectrum; namely, How is the international system of flexible exchange rates working these days?

  Content Type(s): Press, Speeches and appearances, Remarks
• May 20, 1997

  Monetary Policy Report – May 1997

  Since the last Report, the Canadian economy has advanced broadly in line with expectations.

  Content Type(s): Publications, Monetary Policy Report
• May 14, 1997

  The changing business activities of banks in Canada

  Bank of Canada Review - Spring 1997 Jim Armstrong

  Over the last 30 years, the business mix of banks in Canada has changed significantly. Progress in information-processing technology, legislative changes, and market forces have combined to blur the traditional distinctions between banks and other financial institutions and have allowed banks to offer a much wider range of products and services. In this article, the author reviews the expansion of bank lending to households over this period and their recent movement into personal wealth management. While these trends were facilitated by revisions to legislation, they also reflected the changing needs of the "baby boom" generation, first as home-buyers and, more recently, as middle-aged investors. On the commercial and corporate side, banks reacted to the rapid expansion of securities markets (and to the reduced demand for intermediation by both lenders/depositors and borrowers) by moving into investment banking, after legislative changes opened this business to them in the late 1980s. They also used their expertise in credit assessment and risk management to provide credit guarantees and to act as counterparties and intermediaries in derivatives markets. Notable in this broadening of bank activities has been their more recent entry into the trust, mutual fund, and retail brokerage business. The banks have also made preliminary forays into insurance. The expansion of off-balance-sheet activities has made fee income an increasingly important part of bank earnings. The article also looks at the emerging tools and techniques that will most likely transform the structure of banking in the future.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial institutions
• May 14, 1997

  Bank of Canada Review - Spring 1997

  

  Cover page

  Japanese oban

  Photography by James Zagon.

  Content Type(s): Publications, Bank of Canada Review
• May 13, 1997

  Capacity constraints, price adjustment, and monetary policy

  Bank of Canada Review - Spring 1997 Tiff Macklem

  The short-run Phillips curve describes a positive short-run relationship between the level of economic activity and inflation. When the level of demand in the economy as a whole runs ahead of the level of output that the economy can supply in the short run, price pressures increase and inflation rises. This article reviews the origins of the short-run Phillips curve with particular emphasis on the long-standing idea that the shape of this curve may be non-linear, with inflation becoming more sensitive to changes in output when the cycle of economic activity is high than when it is low. This type of non-linearity in the short-run Phillips curve, which is typically motivated by the effects of capacity constraints that limit the ability of the economy to expand in the short run, has recently attracted renewed attention. The article surveys recent research that finds some evidence of this type of non-linearity in the Phillips curve in Canada and considers the potential implications for monetary policy.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Inflation and prices, Monetary policy transmission, Potential output

• A Micro Approach to the Issue of Hysteresis in Unemployment: Evidence from the 1988­1990 Labour Market Activity Survey

  Staff Working Paper 1997-12 Gordon Wilkinson

  This paper uses a rich set of microeconomic labour market data—the 1988­90 Labour Market Activity Survey published by Statistics Canada—to test whether there is negative duration dependence in unemployment spells. It updates and extends similar work carried out by Jones (1995) who used the 1986­87 Labour Market Activity Survey.

  Content Type(s): Staff research, Staff working papers Topic(s): Labour markets JEL Code(s): E, E2, E24

• 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
• May 1, 1997

  Price Stability, Inflation Targets and Monetary Policy

  Proceedings of a conference - May 1997 (proceedings volume, available in electronic format only)

  Content Type(s): Conferences and workshops