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282
result(s)
Downward Nominal Wage Rigidity Meets the Zero Lower Bound
Staff Working Paper 2017-16
Robert Amano,
Stefano Gnocchi
We add downward nominal wage rigidity to a standard New Keynesian model with sticky prices and wages, where the zero lower bound on nominal interest rates is allowed to bind. We find that wage rigidity not only reduces the frequency of zero bound episodes but also mitigates the severity of corresponding recessions.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation targets,
Labour markets,
Monetary policy framework
JEL Code(s):
E,
E2,
E24,
E3,
E32,
E5,
E52
Price-Level Dispersion versus Inflation-Rate Dispersion: Evidence from Three Countries
Staff Working Paper 2017-3
David Fielding,
Christopher Hajzler,
James (Jim) C. MacGee
Inflation can affect both the dispersion of commodity-specific price levels across locations (relative price variability, RPV) and the dispersion of inflation rates (relative inflation variability, RIV). Some menu-cost models and models of consumer search suggest that the RIV-inflation relationship could differ from the RPV-inflation relationship.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation and prices
JEL Code(s):
E,
E3,
E31,
E5,
E50
Comparing Forward Guidance and Neo-Fisherianism as Strategies for Escaping Liquidity Traps
Staff Analytical Note 2016-16
Robert Amano,
Thomas J. Carter,
Rhys R. Mendes
What path should policy-makers select for the nominal rate when faced with a liquidity trap during which the effective lower bound binds?
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Central bank research,
Economic models,
Inflation and prices,
Interest rates,
Monetary policy framework,
Monetary policy transmission
JEL Code(s):
E,
E4,
E5
On What States Do Prices Depend? Answers from Ecuador
Staff Working Paper 2016-43
Craig Benedict,
Mario J. Crucini,
Anthony Landry
In this paper, we argue that differences in the cost structures across sectors play an important role in firms’ decisions to adjust their prices. We develop a menu-cost model of pricing in which retail firms intermediate trade between producers and consumers.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation and prices,
Monetary policy transmission
JEL Code(s):
E,
E3,
E5,
F,
F3,
F33
A Primer on Neo-Fisherian Economics
Staff Analytical Note 2016-14
Robert Amano,
Thomas J. Carter,
Rhys R. Mendes
Conventional models imply that central banks aiming to raise inflation should lower nominal rates and thus stimulate aggregate demand. However, several economists have recently challenged this conventional wisdom in favour of an alternative “neo-Fisherian’’ view under which higher nominal rates might in fact lead to higher inflation.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Central bank research,
Economic models,
Inflation and prices,
Interest rates,
Monetary policy framework,
Monetary policy transmission
JEL Code(s):
E,
E4,
E5
Output Comovement and Inflation Dynamics in a Two-Sector Model with Durable Goods: The Role of Sticky Information and Heterogeneous Factor Markets
Staff Working Paper 2016-36
Tomiyuki Kitamura,
Tamon Takamura
In a simple two-sector New Keynesian model, sticky prices generate a counterfactual negative comovement between the output of durable and nondurable goods following a monetary policy shock. We show that heterogeneous factor markets allow any combination of strictly positive price stickiness to generate positive output comovement.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation and prices,
Monetary policy transmission
JEL Code(s):
E,
E3,
E31,
E32,
E5,
E52
Ce que révèle une analyse sectorielle des dynamiques récentes de l’inflation au Canada
Staff Analytical Note 2016-7
Laurence Savoie-Chabot
Decomposing total inflation in Canada as measured by the consumer price index (CPI) into its key macroeconomic factors, as presented in the most recent Monetary Policy Report, is an interesting exercise that shows how the exchange rate pass-through, commodity prices and the output gap have influenced the evolution of the total inflation rate over time. This aggregate approach, however, may mask important sectoral changes.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Exchange rates,
Inflation and prices
JEL Code(s):
E,
E3,
E31
May 16, 2016
The Micro and Macro of Downward Nominal Wage Rigidity
The article examines the extent of downward nominal wage rigidity in Canada and its implications for monetary policy. The authors ask whether its existence is a sufficient argument for a higher inflation target if concerns about the effective lower bound are adequately addressed.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Inflation and prices,
Inflation targets,
Labour markets,
Monetary policy framework
JEL Code(s):
E,
E3,
E4,
E5,
J,
J2,
J23,
J3,
J30
May 16, 2016
Monetary Policy Frameworks: Recent International Developments
Inflation-targeting frameworks have remained relatively stable over the past few years despite significant challenges, including prolonged low inflation, a large negative commodity price shock and rising financial stability concerns in some economies. The tools used by central banks have, however, evolved substantially. This article provides a survey of the developments in the inflation-targeting frameworks of 10 central banks in advanced economies that correspond to the three research areas of the Bank of Canada’s 2016 renewal: the level of the inflation target, the measurement of core inflation and financial stability considerations in the formulation of monetary policy.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Inflation targets,
International topics,
Monetary policy framework
JEL Code(s):
E,
E5,
E52,
E58