Sluggish Forecasts Staff working paper 2018-39 Monica Jain Given the influence that agents’ expectations have on key macroeconomic variables, it is surprising that very few papers have tried to extrapolate agents’ “true” expectations directly from the data. This paper presents one such approach, starting with the hypothesis that there is sluggishness in inflation and real GDP growth forecasts. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E31, E37 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
March 9, 2010 Monetary Policy Rules in an Uncertain Environment Bank of Canada Review - Spring 2010 Gino Cateau, Stephen Murchison This article examines recent research on the influence of various forms of economic uncertainty on the performance of different classes of monetary policy rules: from simple rules to fully optimal monetary policy under commitment. The authors explain why uncertainty matters in the design of monetary policy rules and provide quantitative examples from the recent literature. They also present results for several policy rules in ToTEM, the Bank of Canada's main model for projection and analysis, including rules that respond to price level, rather than to inflation. Content Type(s): Publications, Bank of Canada Review articles
A Comprehensive Evaluation of Measures of Core Inflation in Canada: An Update Staff discussion paper 2019-9 Helen Lao, Ceciline Steyn We provide an updated evaluation of the value of various measures of core inflation that could be used in the conduct of monetary policy. We find that the Bank of Canada’s current preferred measures of core inflation—CPI-trim, CPI-median and CPI-common—continue to outperform alternative core measures across a range of criteria. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E3, E31, E5, E52 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission
Monetary Policy Governance: Bank of Canada Practices to Support Policy Effectiveness Staff discussion paper 2024-14 Brigitte Desroches, Sharon Kozicki, Laure Simon We examine different monetary policy governance structures and discuss the important roles of non-legislated processes and practices. We also provide an update on monetary policy governance at the Bank of Canada and how it has evolved over time. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E0, E02, E5, E58 Research Theme(s): Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation
Monetary Policy and the Persistent Aggregate Effects of Wealth Redistribution Staff working paper 2021-38 Martin Kuncl, Alexander Ueberfeldt Monetary policy in the presence of nominal debt and labour supply heterogeneity creates a policy trade-off: a short-term economic stimulus leads to persistently reduced output over the medium term. Price-level targeting weakens this trade-off and is better able to stabilize inflation and output than inflation targeting. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E21, E5, E50 Research Theme(s): Financial system, Household and business credit, Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation, Real economy and forecasting
An update on the Canadian money market mutual fund sector Staff analytical note 2025-25 Jabir Sandhu, Sofia Tchamova, Rishi Vala We examine the Canadian money market fund (MMF) sector and find that it has grown rapidly, holding a large share of treasury bills and commercial paper. Unlike in some other jurisdictions where investor outflows likely amplified stresses, Canadian MMFs experienced inflows during the March 2020 market turmoil. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E4, E40, G, G0, G00, G01, G1, G2, G23 Research Theme(s): Financial markets and funds management, Market functioning, Financial system, Financial institutions and intermediation, Financial stability and systemic risk
Losing Contact: The Impact of Contactless Payments on Cash Usage Staff working paper 2020-56 Marie-Hélène Felt Contactless payment cards are a competitive alternative to cash. Using Canadian panel data from 2010 to 2017, this study investigates whether contactless credit cards are an important contributor to the decline in the transactional use of cash. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C3, C33, D, D1, D12, E, E4, E41 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Cash and bank notes, Retail payments
A Horse Race of Alternative Monetary Policy Regimes Under Bounded Rationality Staff discussion paper 2022-4 Joel Wagner, Tudor Schlanger, Yang Zhang We introduce bounded rationality in a canonical New Keynesian model calibrated to match Canadian macroeconomic data since Canada’s adoption of inflation targeting. We use the model to quantitatively assess the macroeconomic impact of alternative monetary policy regimes. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E2, E27, E3, E4, E5, E52, E58 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission
Estimating the Effect of Exchange Rate Changes on Total Exports Staff working paper 2019-17 Thierry Mayer, Walter Steingress This paper shows that real effective exchange rate (REER) regressions, the standard approach for estimating the response of aggregate exports to exchange rate changes, imply biased estimates of the underlying elasticities. We provide a new aggregate regression specification that is consistent with bilateral trade flows micro-founded by the gravity equation. Content Type(s): Staff research, Staff working papers JEL Code(s): F, F1, F11, F12, F3, F31, F32 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Structural challenges, International trade, finance and competitiveness
November 19, 2015 Bank of Canada Review - Autumn 2015 In this issue, Bank researchers discuss the muted recovery from the 2007–09 financial crisis and possible causes. There are also discussions about the Bank’s new Canadian survey of household expectations, measuring both durable goods and housing prices in the CPI and how regulatory changes may affect monetary policy operating frameworks. In the final article, improvements to the management of Canada’s foreign exchange reserves are introduced. Content Type(s): Publications, Bank of Canada Review