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282
result(s)
The Zero Bound on Nominal Interest Rates: How Important Is It?
Staff Working Paper 2001-6
David Amirault,
Brian O'Reilly
This paper surveys the literature on the zero bound on the nominal interest rate. It addresses questions ranging from the conditions under which the zero bound on the nominal interest rate might occur to policy options to avoid or use to exit from such a situation. We discuss literature that examines historical and country evidence, and literature that uses models to generate evidence on this question.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Credibility,
Inflation targets,
Monetary policy transmission
JEL Code(s):
E,
E3,
E31,
E5,
E52,
E58,
E6,
E61
On the Nature and the Stability of the Canadian Phillips Curve
Staff Working Paper 2001-4
Maral Kichian
This paper empirically determines why, during the 1990s, inflation in Canada was consistently more stable than predicted by the fixed-coefficients Phillips curve. A time-varying-coefficient model, where all the parameters adjust simultaneously, shows that the behaviour of expectations was probably a major contributing factor.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Econometric and statistical methods,
Inflation and prices
JEL Code(s):
E,
E3,
E37
On Commodity-Sensitive Currencies and Inflation Targeting
Staff Working Paper 2001-3
Kevin Clinton
Two aspects of the recent monetary history of Canada, Australia, and New Zealand stand out: the sensitivity of their dollars to prices of resource-based commodities, and inflation targeting. This paper explores various aspects of these phenomena.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Exchange rates,
Inflation targets,
International topics,
Monetary policy implementation
JEL Code(s):
E,
E3,
E31,
E5,
E52,
F,
F3,
F31,
F4,
F42
Core Inflation
Technical Report No. 89
Seamus Hogan,
Marianne Johnson,
Thérèse Laflèche
The Bank of Canada uses core CPI inflation, the year-over-year rate of change of the consumer price index excluding food, energy, and the effects of changes in indirect taxes, as the operational guide for monetary policy.
Content Type(s):
Staff research,
Technical reports
Topic(s):
Inflation and prices
JEL Code(s):
E,
E3,
E31
November 13, 2000
Seminar Summary: Price Stability and the Long-Run Target for Monetary Policy
On 8 and 9 June 2000, the Bank held a seminar to examine some key issues affecting the upcoming decision on Canada's inflation-control target for the period after 2001. The main issues covered at the seminar were the extent of downward nominal-wage rigidity and its implications for employment as well as the relative merits of price-level targeting versus inflation targeting. Another critical question that was discussed was how to balance the evidence on all the relevant issues in order to develop an overall view on the appropriate long-run target. The author gives a brief overview of the seminar followed by detailed summaries of individual papers.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Inflation targets
Inflation and the Tax System in Canada: An Exploratory Partial-Equilibrium Analysis
Staff Working Paper 2000-18
Brian O'Reilly,
Mylène Levac
This paper reports on an exploratory application to Canadian data of an approach pioneered by Martin Feldstein (1997, 1999). Feldstein finds that even at low inflation rates there are costs arising from the distortions introduced by the interaction of inflation with the taxation of income from capital (capital gains, dividends, and interest) in a less-than-perfectly-indexed tax system.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation: costs and benefits
JEL Code(s):
E,
E5,
E6
August 16, 2000
The Changing Face of Central Banking in the 1990s
During the 1990s, central banks in the industrialized countries made important changes in the way they operate. As part of these initiatives, central banks have endeavoured to define a set of best practices, learning from each other in the process. The goal was to improve and adapt the frameworks within which monetary policy is implemented. Clarifying Objectives A clear objective is a necessary starting point for any policy framework. The growing consensus that price stability is the most appropriate objective for monetary policy was perhaps one of the most critical developments of the past decade. Price stability is now universally regarded as the key contribution that monetary policy can make to promote sustainable growth and maximize the level of employment. Central banks also need a clear strategy for achieving their objective. A major development of the past decade was the growing popularity of inflation targets as the numerical focus for monetary policy. Clearly defined inflation targets focus policy on the variable that is directly associated with price stability. The Bank of Canada was one of the first to adopt (in 1991) a set of targets for inflation over a specified time horizon. Accountability Many central banks have acquired greater independence and this, together with the public's desire for more information from key public institutions, has raised the standards for accountability. At the same time, explicit targets provide a clear measure against which to judge the performance of the monetary authorities. Increased accountability also has implications for the overall transparency of the monetary authorities. In sum, central banks have become much more open institutions and are placing greater emphasis on their communications activities. As an example, comprehensive inflation reports have become key communications vehicles for a number of central banks. Many of the changes implemented by central banks stem from the desire to improve the credibility of monetary policy, thus making it easier for monetary authorities to achieve their objectives. Although it is difficult to ascertain the overall effect of the evolving policy framework, it is encouraging that inflation and inflation expectations were at low levels at the end of the 1990s, thus providing a solid base for monetary policy in the future.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Credibility,
Inflation targets,
International topics,
Monetary policy framework
Identifying Policy-makers' Objectives: An Application to the Bank of Canada
Staff Working Paper 2000-11
Nicholas Rowe,
James Yetman
In this paper, we develop a new way to test hypotheses about policy-makers' targets, and we implement that test for Canadian monetary policy.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation targets
JEL Code(s):
E,
E5,
E52,
E6,
E61
Non-Parametric and Neural Network Models of Inflation Changes
Staff Working Paper 2000-7
Greg Tkacz
Previous studies have shown that interest rate yield spreads contain useful information about future changes in inflation. However, such studies have for the most part focused on linear models, ignoring potential non-linearities between interest rates and inflation.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Economic models,
Inflation and prices
JEL Code(s):
C,
C5,
C51,
E,
E3,
E31