Posts

• November 8, 1995

  The role of monetary conditions and the monetary conditions index in the conduct of policy

  Bank of Canada Review - Autumn 1995 Charles Freedman

  In these excerpts from a presentation to a conference in Toronto, Deputy Governor Charles Freedman analyses the way in which the monetary conditions index (MCI) enters into the Bank's thinking and actions. He describes how the Bank works in the context of a forward-looking assessment of economic developments and inflationary pressures to decide upon a desired path for the MCI that will result in a rate of inflation, six to eight quarters ahead, that is within the Bank's target band. Mr. Freedman also uses specific examples to explain how various shocks to the economy can change the Bank's desired path for monetary conditions. He describes the role that tactical considerations relating to market circumstances play regarding the timing of Bank actions to bring monetary conditions onto the desired path and emphasizes the need to give precedence to steadying nervous markets.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary conditions index

• Long-Run Demand for M1

  Staff Working Paper 1995-11 Scott Hendry

  The goal of this paper is to investigate and estimate long-run relationships among M1, prices, output and interest rates, with a view to determining if there is a stable relationship that can be interpreted as long-run money demand. The paper uses a maximum-likelihood multiple-equation cointegration technique, developed by Johansen, to fit a system of equations […]

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Monetary aggregates

• The Canadian Experience with Weighted Monetary Aggregates

  Staff Working Paper 1995-10 David Longworth, Joseph Atta-Mensah

  This paper compares the empirical performance of Canadian weighted monetary aggregates (in particular, Fisher ideal aggregates) with the current summation aggregates, for their information content and forecasting performance in terms of prices, real output and nominal spending for the period 1971Q1 to 1989Q3. The properties of money-demand equations for these aggregates, particularly their temporal stability, […]

  Content Type(s): Staff research, Staff working papers Topic(s): Monetary aggregates

• Selection of the Truncation Lag in Structural VARs (or VECMs) with Long-Run Restrictions

  Staff Working Paper 1995-9 Alain DeSerres, Alain Guay

  authors examine the issue of lag-length selection in the context of a structural vector autoregression (VAR) and a vector error-correction model with long-run restrictions. First, they show that imposing long-run restrictions implies, in general, a moving-average (MA) component in the stationary multivariate representation. Then they examine the sensitivity of estimates of the permanent and transitory […]

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods

• Exchange Rates and Oil Prices

  Staff Working Paper 1995-8 Robert Amano, Simon van Norden

  This paper derives analytical gradients for a broad class of regime-switching models with Markovian state-transition probabilities. Such models are usually estimated by maximum likelihood methods, which require the derivatives of the likelihood function with respect to the parameter vector. These gradients are usually calculated by means of numerical techniques. The paper shows that analytical gradients […]

  Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates
• August 10, 1995

  Aspects of economic restructuring in Canada, 1989-1994

  Bank of Canada Review - Summer 1995 Ron Parker

  The way in which Canadian firms produce goods and services has changed dramatically during the 1990s. A major feature of this restructuring has been a shift towards greater use of capital goods, particularly computer-based technology, relative to labour in production processes. The author examines this phenomenon from a macroeconomic perspective, identifying the principal factors behind the trends in investment and employment since the late 1980s. The analysis focusses on the relative costs of capital and labour over the period and on their implications for output and employment.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Productivity, Recent economic and financial developments
• August 10, 1995

  Bank of Canada Review - Summer 1995

  

  Cover page

  France: 1,000 francs, 1944

  The 1,000 franc note is part of the National Currency Collection, Bank of Canada.

  Photography by James Zagon.

  Content Type(s): Publications, Bank of Canada Review
• August 9, 1995

  Uncertainty and the transmission of monetary policy in Canada (HERMES-Glendon Lecture)

  Bank of Canada Review - Summer 1995 Gordon Thiessen

  Gordon Thiessen, Governor of the Bank of Canada, delivered the HERMES-Glendon Lecture at York University, Toronto, in March 1995. The speech focussed on the interrelationships of uncertainty and the transmission of monetary policy to the economy. It looked at how the various types of uncertainty influence the behaviour of economic actors, and at how uncertainty affects the transmission of monetary policy through the economy. The first part of the lecture outlines the Bank of Canada's view of the transmission mechanism, with considerable attention paid to the role of uncertainty. In the second part, the various ways in which the Bank has tried to reduce uncertainty are discussed. The various kinds of uncertainty that impinge on the economy and on the policy process are addressed.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary policy implementation

• Analytical Derivatives for Markov Switching Models

  Staff Working Paper 1995-7 Jeff Gable, Simon van Norden, Robert Vigfusson

  This paper derives analytical gradients for a broad class of regime-switching models with Markovian state-transition probabilities. Such models are usually estimated by maximum likelihood methods, which require the derivatives of the likelihood function with respect to the parameter vector. These gradients are usually calculated by means of numerical techniques. The paper shows that analytical gradients […]

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods

• Inflation, Learning and Monetary Policy Regimes in The G-7 Economies

  Staff Working Paper 1995-6 Nicholas Ricketts, David Rose

  In this paper, the authors report estimates of two- and three-state Markov switching models applied to inflation, measured using consumer price indexes, in the G-7 countries. They report tests that show that two-state models are preferred to simple one-state representations of the data, and argue that three-state representations are more satisfactory than two-state representations for […]

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices