Expectations and Monetary Policy: Experimental Evidence Staff Working Paper 2013-44 Oleksiy Kryvtsov, Luba Petersen The effectiveness of monetary policy depends, to a large extent, on market expectations of its future actions. In a standard New Keynesian business-cycle model with rational expectations, systematic monetary policy reduces the variance of inflation and the output gap by at least two-thirds. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Monetary policy implementation, Monetary policy transmission JEL Code(s): C, C9, D, D8, D84, E, E3, E5, E52
Credit Market Frictions and Sudden Stops Staff Working Paper 2014-49 Yuko Imura Financial crises in emerging economies in the 1980s and 1990s often entailed abrupt declines in foreign capital inflows, improvements in trade balance, and large declines in output and total factor productivity (TFP). Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Financial markets, International topics JEL Code(s): E, E2, E22, E3, E32, F, F4, F41, G, G0, G01
May 17, 2012 On the Adjustment of the Global Economy Bank of Canada Review - Spring 2012 Carlos De Resende, Claudia Godbout, René Lalonde, Eric Morin, Nikita Perevalov This article discusses three scenarios for the adjustment of the global economy. In a “baseline” scenario—which encompasses fiscal consolidation in major advanced economies, growth-friendly structural reforms in Europe and Japan, and greater exchange rate flexibility and reforms in the emerging-market economies of Asia to induce rotation of demand away from net exports—global current account imbalances […] Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Balance of payments and components, Exchange rates, Fiscal policy, International topics, Recent economic and financial developments JEL Code(s): F, F3, F32, F37, F4, F42
Education and Self-Employment: Changes in Earnings and Wealth Inequality Staff Working Paper 2006-40 Yaz Terajima The author quantitatively studies the interaction between education and occupation choices and its implication for the relationship between the changes in earnings inequality and the changes in wealth inequality in the United States over the 1983–2001 period. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Labour markets JEL Code(s): D, D3, D31, I, I2, I21, J, J2, J23
What to Target? Insights from a Lab Experiment Staff Working Paper 2021-53 Isabelle Salle In a laboratory experiment, we ask participants to predict inflation using three different policy regimes: inflation targeting—with and without greater communication of the target—average inflation targeting and price level targeting. We use participants’ predictions to compare the level and stability of inflation under each regime. Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation targets, Monetary policy communications, Monetary policy framework JEL Code(s): C, C9, C92, E, E3, E31, E5, E52, E7
October 24, 2016 Renewal of the Inflation-Control Target (October 2016) Commentary and technical data relating to the 2016 target renewal. Content Type(s): Background materials Research Topic(s): Inflation and prices, Monetary policy
August 25, 2020 Perceived inflation and reality: understanding the difference Remarks (delivered virtually) Lawrence L. Schembri Canadian Association for Business Economics Kingston, Ontario In a virtual address to the Canadian Association for Business Economics, Deputy Governor Lawrence Schembri discusses the difference between how Canadians perceive inflation and the actual measured rate. He explains why that gap may exist and what it could mean for monetary policy and the economy. Content Type(s): Press, Speeches and appearances, Remarks Research Topic(s): Central bank research, Coronavirus disease (COVID-19), Inflation and prices, Inflation targets, Monetary policy
Impact of Electronic Trading Platforms on the Brokered Interdealer Market for Government of Canada Benchmark Bonds Staff Working Paper 2007-5 Natasha Khan This study examines the impact of increased transparency, brought about by the introduction of three electronic trading systems, on the brokered interdealer market for Government of Canada benchmark securities. Using the CanPX dataset for the 2-, 5-, 10-, and 30-year benchmarks, the paper finds some evidence of decreased bid-ask spreads for the 30-year benchmark in the months following the introduction of the electronic platforms. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial markets, Market structure and pricing JEL Code(s): G, G1, G10, G14
December 22, 2003 Current Account Imbalances: Some Key Issues for the Major Industrialized Countries Bank of Canada Review - Winter 2003-2004 Jocelyn Jacob The resurgence of sizable current account imbalances in the major economies in recent years, particularly the tripling of the U.S. deficit, has led to renewed academic and public discussions about their sustainability. Jacob's main objective is to show that current account balances are simply the outcome of various relative structural and cyclical forces between trading partners. He reviews the factors behind the changes in the current account positions of the three largest industrial economies (the United States, Japan, and the euro area). Two strong determinants shaping the current account balances are the faster increase in U.S. productivity compared with that of other major economies and, more recently, the loosening in the U.S. fiscal stance. Jacob also reviews a range of outside assessments from such sources as the Organisation for Economic Co-operation and Development and the International Monetary Fund, as well as the academic literature, to determine the possible risks to macroeconomic and financial stability. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Exchange rates, International topics
Bank Failures and Bank Fundamentals: A Comparative Analysis of Latin America and East Asia during the Nineties using Bank-Level Data Staff Working Paper 2005-19 Marco Arena The author develops the first comparative empirical study of bank failures during the nineties between East Asia and Latin America using bank-level data, in order to address the following two questions: (i) To what extent did individual bank conditions explain bank failures? (ii) Did mainly the weakest banks, in terms of their fundamentals, fail in the crisis countries? Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions JEL Code(s): G, G2, N, N2