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 Topic(s): Inflation targets, Monetary policy communications, Monetary policy framework JEL Code(s): C, C9, C92, E, E3, E31, E5, E52, E7
The Bank of Canada’s “Horse Race” of Alternative Monetary Policy Frameworks: Some Interim Results from Model Simulations Staff Discussion Paper 2021-13 José Dorich, Rhys R. Mendes, Yang Zhang Bank of Canada staff are running a “horse race” of alternative monetary policy frameworks in the lead-up to 2021 renewal of the Bank’s monetary policy framework. This paper summarizes some interim results of model simulations from their research. Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Economic models, Inflation targets, Monetary policy, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E2, E27, E3, E4, E5, E52, E58
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 Topic(s): Monetary policy framework, Monetary policy transmission JEL Code(s): E, E2, E21, E5, E50
Exploring the potential benefits of inflation overshooting Staff Analytical Note 2021-16 Robert Amano, Marc-André Gosselin, Kurt See After a period with the interest rate at the effective lower bound, temporarily overshooting inflation may offer important economic benefits. This may be especially true for vulnerable segments of the population, such as workers with low attachment to the labour force and the long-term unemployed. Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation targets, Labour markets, Monetary policy, Monetary policy framework JEL Code(s): E, E3, E31, E5, E52, J, J2, J20
(Optimal) Monetary Policy with and without Debt Staff Working Paper 2021-5 Boris Chafwehé, Rigas Oikonomou, Romanos Priftis, Lukas Vogel How should policy be designed at high debt levels, when fiscal authorities have little room to adjust taxes? Assigning the monetary authority a role in achieving debt sustainability makes it less effective in stabilizing inflation and output. Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Fiscal policy, Monetary policy, Monetary policy framework JEL Code(s): C, C1, C11, E, E3, E31, E5, E52, E58, E6, E62
Chinese Monetary Policy and Text Analytics: Connecting Words and Deeds Staff Working Paper 2021-3 Jeannine Bailliu, Xinfen Han, Barbara Sadaba, Mark Kruger What are the main drivers behind the monetary policy reaction function of the People’s Bank of China? Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, International topics, Monetary policy communications, Monetary policy framework JEL Code(s): C, C6, C63, E, E5, E52, E58
November 12, 2020 Helping the economy after the COVID‑19 pandemic Speech summary Carolyn A. Wilkins Munk School of Global Affairs and Public Policy Toronto, Ontario The pandemic won’t last forever. Senior Deputy Governor Carolyn A. Wilkins talks about what the economy will need once we’re past the COVID-19 crisis. Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Business fluctuations and cycles, Central bank research, Climate change, Coronavirus disease (COVID-19), Debt management, Digital currencies and fintech, Expectations, Financial institutions, Financial stability, Financial system regulation and policies, Firm dynamics, Fiscal policy, Inflation targets, Interest rates, Labour markets, Monetary policy communications, Monetary policy framework, Payment clearing and settlement systems, Potential output, Productivity, Recent economic and financial developments
November 12, 2020 Exploring life after COVID-19: the far side of the moon Remarks (delivered virtually) Carolyn A. Wilkins Munk School of Global Affairs and Public Policy Toronto, Ontario Senior Deputy Governor Carolyn A. Wilkins discusses what the economy will need once we’re past the COVID-19 crisis. Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Business fluctuations and cycles, Central bank research, Climate change, Coronavirus disease (COVID-19), Debt management, Digital currencies and fintech, Expectations, Financial institutions, Financial stability, Financial system regulation and policies, Firm dynamics, Fiscal policy, Inflation targets, Interest rates, Labour markets, Monetary policy communications, Monetary policy framework, Payment clearing and settlement systems, Potential output, Productivity, Recent economic and financial developments
Monetary Policy and Cross-Border Interbank Market Fragmentation: Lessons from the Crisis Staff Working Paper 2020-34 Tobias Blattner, Jonathan Swarbrick We present a two-country model featuring risky lending and cross-border interbank market frictions. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Credit and credit aggregates, International financial markets, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E4, E44, E5, E52, F, F3, F32, F36
August 26, 2020 Towards the 2021 Renewal of the Bank of Canada’s Monetary Policy Framework As part of the 2021 renewal of the Bank of Canada’s inflation-control agreement with the Government of Canada, Bank staff are currently comparing several monetary policy frameworks. The primary goal of this day-long workshop is to share—and receive comments on—these comparisons. Content Type(s): Conferences and workshops Topic(s): Inflation targets, Monetary policy, Monetary policy framework