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3040 Results

May 19, 2011

Lessons from the Use of Extraordinary Central Bank Liquidity Facilities

The recent crisis was characterized by widespread deterioration in funding conditions, as well as impairment of the mechanism through which liquidity is normally redistributed within the financial system. Central banks responded with extraordinary measures. This article examines the provision of liquidity by central banks during the crisis as they adapted their existing facilities and introduced new ones, while encouraging a return to private markets and mitigating moral hazard. A review of this experience illustrates the importance of clear principles for intervention, a flexible operating framework, and clear communication and co-operation by central banks. By exposing the degree of interdependence of financial institutions and markets, the crisis highlighted the need for reforms aimed at improving the infrastructure supporting core funding markets and the liquidity of individual institutions.
October 8, 2006

Modelling Financial Channels for Monetary Policy Analysis

The Bank of Canada considers a wide range of information and analysis before making a monetary policy decision and uses carefully articulated models to produce economic projections and to examine alternative scenarios. This article describes an ongoing research agenda at the Bank to develop models in which financial variables play an active role in the transmission of monetary policy actions to economic activity. Such models can help to analyze information from the financial side of the economy and to provide an overall view of the implications of financial developments for the current economic outlook. The authors also explain how this research can help address other issues relevant to the objectives of monetary policy, including how asset-price movements should be taken into account in the monetary policy framework.

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.

A No-Arbitrage Analysis of Macroeconomic Determinants of Term Structures and the Exchange Rate

Staff Working Paper 2007-21 Fousseni Chabi-Yo, Jun Yang
We study the joint dynamics of macroeconomic variables, bond yields, and the exchange rate in an empirical two-country New-Keynesian model complemented with a no-arbitrage term structure model. With Canadian and US data, we are able to study the impact of macroeconomic shocks from both countries on their yield curves and the exchange rate.

Central Bank Communications Before, During and After the Crisis: From Open-Market Operations to Open-Mouth Policy

Staff Working Paper 2013-41 Ianthi Vayid
The days when secrecy and opacity were the bywords of central banking are gone. The advent of inflation targeting in the early 1990s acted as the catalyst for enhanced transparency and communications in the conduct of monetary policy.
November 18, 2010

Bank of Canada Review - Autumn 2010

BoC Review - Autumn 2010
The premise that exchange rate pass-through has declined is critically reassessed; intensity in the negative feedback process between financial sector developments and the real economy during the recent global crisis is examined; update on past decade’s changing trends in debt issuance in Canada relative to those in other capital markets.

The Impact of Common Currencies on Financial Markets: A Literature Review and Evidence from the Euro Area

Staff Working Paper 2002-35 Liliane Karlinger
This paper reviews both the theoretical and empirical literature on the impact of common currencies on financial markets and evaluates the first three years of experience with Economic and Monetary Union (EMU).
Content Type(s): Staff research, Staff working papers Research Topic(s): Exchange rate regimes, Financial markets JEL Code(s): E, E4, E44, F, F2, F21, F3, F36, G, G1, G15

Learning-by-Doing or Habit Formation?

Staff Working Paper 2005-15 Hafedh Bouakez, Takashi Kano
In a recent paper, Chang, Gomes, and Schorfheide (2002) extend the standard real business cycle (RBC) model to allow for a learning-by-doing (LBD) mechanism whereby current labour supply affects future productivity.
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