Inflation Expectations and Learning about Monetary Policy Staff Working Paper 2002-30 David Andolfatto, Scott Hendry, Kevin Moran Various measures indicate that inflation expectations evolve sluggishly relative to actual inflation. In addition, they often fail conventional tests of unbiasedness. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): E, E4, E47, E5, E52, E58
Exponentials, Polynomials, and Fourier Series: More Yield Curve Modelling at the Bank of Canada Staff Working Paper 2002-29 David Bolder, Scott Gusba This paper continues the work started by Bolder and Stréliski (1999) and considers two alternative classes of models for extracting zero-coupon and forward rates from a set of observed Government of Canada bond and treasury-bill prices. Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Financial markets, Interest rates JEL Code(s): C, C0, C6, E, E4, G, G1
Habit Formation and the Persistence of Monetary Shocks Staff Working Paper 2002-27 Hafedh Bouakez, Emanuela Cardia, Francisco Ruge-Murcia This paper studies the persistent effects of monetary shocks on output. Previous empirical literature documents this persistence, but standard general-equilibrium models with sticky prices fail to generate output responses beyond the duration of nominal contracts. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Monetary policy transmission JEL Code(s): E, E3, E4, E5
Nominal Rigidities and Monetary Policy in Canada Since 1981 Staff Working Paper 2002-25 Ali Dib This paper develops and estimates a dynamic, stochastic, general-equilibrium model with price and wage stickiness to analyze monetary policy in Canada. Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy framework JEL Code(s): E, E3, E31, E32, E5, E52
How to Improve Inflation Targeting at the Bank of Canada Staff Working Paper 2002-23 Nicholas Rowe This paper shows that if the Bank of Canada is optimally adjusting its monetary policy instrument in response to inflation indicators to target 2 per cent inflation at a two-year horizon, then deviations of inflation from 2 per cent represent the Bank's forecast errors, and should be uncorrelated with its information set, which includes two-year lagged values of the instrument and the indicators. Positive or negative correlations are evidence of systematic errors in monetary policy. Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets, Monetary and financial indicators, Monetary policy implementation JEL Code(s): E, E5
The Usefulness of Consumer Confidence Indexes in the United States Staff Working Paper 2002-22 Brigitte Desroches, Marc-André Gosselin This paper assesses the usefulness of consumer confidence indexes in forecasting aggregate consumer spending in the United States. Content Type(s): Staff research, Staff working papers Topic(s): Domestic demand and components, Economic models, International topics JEL Code(s): D, D1, D12, E, E2, E21, E27
Entrepreneurial Risk, Credit Constraints, and the Corporate Income Tax: A Quantitative Exploration Staff Working Paper 2002-21 Césaire Meh This paper describes the positive effect that corporate income tax has on capital formation in the presence of liquidity constraints and uninsurable risk. Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Fiscal policy JEL Code(s): D, D3, D31, E, E6, E62, H, H2, H20, H23
Evaluating the Quarterly Projection Model: A Preliminary Investigation Staff Working Paper 2002-20 Robert Amano, Kim McPhail, Hope Pioro, Andrew Rennison This paper summarizes the results of recent research evaluating the Bank of Canada's Quarterly Projection Model (QPM). Content Type(s): Staff research, Staff working papers Topic(s): Economic models JEL Code(s): C, C5, C52, E, E1, E17, E3, E30, E37
Dollarization in Canada: The Buck Stops There Technical Report No. 90 John Murray, James Powell The sharp depreciation of the Canadian dollar and the successful launch of the euro have spawned an animated debate in Canada concerning the potential benefits of formally adopting the U.S. dollar as our national currency. Content Type(s): Staff research, Technical reports Topic(s): Exchange rate regimes JEL Code(s): E, E3, E32, F, F3, F33, F36
Estimates of the Sticky-Information Phillips Curve for the United States, Canada, and the United Kingdom Staff Working Paper 2002-19 Hashmat Khan, Zhenhua Zhu Mankiw and Reis (2001a) have proposed a "sticky-information"-based Phillips curve (SIPC) to address some of the concerns with the "sticky-price"-based new Keynesian Phillips curve. Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Inflation and prices JEL Code(s): E, E3, E31