The Neutral Interest Rate: Past, Present and Future Staff discussion paper 2024-3 Matteo Cacciatore, Bruno Feunou, Galip Kemal Ozhan The decline in safe real interest rates over the past three decades has reignited discussions on the neutral real interest rate, known as R*. We address the determinants and estimation methods of R*, as well as the factors influencing its decline and its future trajectory. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E4, E43, E5, E52, E6, E62 Research Theme(s): Monetary policy, Monetary policy framework and transmission, Real economy and forecasting
December 11, 2007 The Zero Bound on Nominal Interest Rates: Implications for Monetary Policy Bank of Canada Review - Winter 2007-2008 Claude Lavoie, Stephen Murchison One of the most important factors that must be considered if countries are thinking about lowering the target level of inflation much below 2 per cent is the zero interest bound. Targeting inflation rates that are too low, the authors note, may restrict the ability of monetary policy to respond to economic shocks by limiting the amount by which interest rates can be eased. Content Type(s): Publications, Bank of Canada Review articles
February 24, 2015 Lessons New and Old: Reinventing Central Banking Remarks Stephen S. Poloz Western University President's Lecture London, Ontario Governor Stephen S. Poloz discusses the need to integrate financial stability concerns with inflation control in conducting monetary policy after the financial crisis. Content Type(s): Press, Speeches and appearances, Remarks
Digitalization: Definition and Measurement Staff discussion paper 2023-20 Guyllaume Faucher, Stéphanie Houle This paper provides an overview of digitalization and its economic implications. We assess the scope of digitalization in Canada as well as the challenges related to its measurement. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E0, E01, O, O3, O33, O5, O51 Research Theme(s): Models and tools, Economic models, Structural challenges, Digitalization and productivity
The “Too Big to Fail” Subsidy in Canada: Some Estimates Staff working paper 2018-9 Patricia Palhau Mora Implicit government guarantees of banking-sector liabilities reduce market discipline by private sector stakeholders and temper the risk sensitivity of funding costs. This potentially increases the likelihood of bailouts from taxpayers, especially in the absence of effective resolution frameworks. Content Type(s): Staff research, Staff working papers JEL Code(s): G, G1, G13, G2, G21, G28 Research Theme(s): Financial system, Financial stability and systemic risk, Financial system regulation and oversight
January 15, 2008 Bank of Canada Review - Winter 2007-2008 Cover page Roman Antoninianus The coins form part of the National Currency Collection of the Bank of Canada. Photography by Gord Carter, Ottawa. Content Type(s): Publications, Bank of Canada Review
Non-linéarité de la courbe de Phillips : un survol de la littérature Staff analytical note 2018-3 Renaud St-Cyr The paper reviews evidence from the economic literature on the nature of the relationship between excess capacity and inflation, better known as the Phillips curve. In particular, we examine the linearity of this relationship. This is an important issue in the current economic context in which advanced economies are approaching or exceed their potential output. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E3, E31, E32 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
How Do Central Bank Projections and Forward Guidance Influence Private-Sector Forecasts? Staff working paper 2018-2 Monica Jain, Christopher S. Sutherland We construct a 23-country panel data set to consider the effect of central bank projections and forward guidance on private-sector forecast disagreement. We find that central bank projections and forward guidance matter mainly for private-sector forecast disagreement surrounding upcoming policy rate decisions and matter less for private-sector macroeconomic forecasts. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D8, D83, E, E3, E37, E5, E52, E58 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation, Real economy and forecasting
Cash, COVID-19 and the Prospects for a Canadian Digital Dollar Staff discussion paper 2022-17 Walter Engert, Kim Huynh We provide an analysis of cash trends in Canada before and during the COVID-19 pandemic. We also consider the potential two scenarios for issuance of a central bank digital currency in Canada: the emergence of a cashless society or the widespread use of an alternative digital currency in Canada. Finally, we discuss the Canadian experience in maintaining cash as an efficient and accessible method of payment and store of value. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C1, C12, C9, E, E4, O, O5, O54 Research Theme(s): Money and payments, Cash and bank notes, Digital assets and fintech
CBDC and Monetary Sovereignty Staff analytical note 2020-5 Antonio Diez de los Rios, Yu Zhu In an increasingly digitalized world, issuers of private digital currency can weaken central banks’ ability to stabilize the economy. By continuing to make central bank money attractive as a payment instrument in a digital world, a central bank digital currency (CDBC) could help to maintain a country’s monetary sovereignty. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E5, E52, E58, F, F5, F55, G, G1, G15 Research Theme(s): Financial system, Financial stability and systemic risk, Monetary policy, Monetary policy tools and implementation, Money and payments, Digital assets and fintech, Payment and financial market infrastructures