May 15, 1999 Recent developments in the monetary aggregates and their implications Bank of Canada Review - Spring 1999 Joseph Atta-Mensah, Loretta Nott In its conduct of monetary policy, the Bank of Canada carefully monitors the pace of monetary expansion for indications about the outlook for inflation and economic activity. In recent years, a number of factors have distorted the growth of the traditional broad and narrow aggregates. In this article, the authors discuss the uncertainty surrounding the classification of deposit instruments that has resulted from the elimination of reserve requirements and from other financial innovations. They introduce two new measures of transactions balances, M1+ and M1++ (described more fully in a technical note in this issue of the Review), that internalize some of the substitutions that have occurred. They attribute the deceleration in M1 growth in 1998 partly to the declining influence of special factors, partly to a lagged response to interest rate increases in 1997 and early 1998, and partly to some temporary tightening in credit conditions in the autumn of 1998. The broad monetary aggregate M2++, which includes all personal savings deposits, life insurance annuities, and mutual funds, grew at a steady pace in 1998, presaging growth of about 4 to 5 per cent in total dollar spending and inflation inside the target range. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary aggregates
May 15, 1999 Bank of Canada Review - Spring 1999 Cover page Merchant’s note, 1837 Approximately four by three inches in size, this bon is part of the National Currency Collection, Bank of Canada. Photography by James Zagon. Content Type(s): Publications, Bank of Canada Review
May 14, 1999 Open outcry and electronic trading in futures exchanges Bank of Canada Review - Spring 1999 Raymond Tsang Despite the efficiency gains that accompany automation, most large futures exchanges have been reluctant to move away from the traditional trading floor, citing early evidence that open outcry exchanges were more liquid than electronic exchanges. More recent studies, however, suggest that electronic trading is superior to open outcry in many respects, including liquidity. In this article, the author compares the two trading systems. Although many exchanges are shifting towards electronic trading, there are still several obstacles to this transition. But as technology rapidly reduces the cost of automation and increases the demand for global 24-hour trading, a worldwide transition to electronic order-matching will likely be the next important milestone for futures exchanges. Less-automated exchanges (including the Canadian futures exchanges) will undoubtedly continue to study and promote automation in order to keep pace with technological innovations. Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial markets
May 4, 1999 Global financial turbulence and the Canadian economy Remarks Gordon Thiessen La Chambre de commerce de la région sherbrookoise Sherbrooke, Quebec The world economy and Canada have had to navigate some difficult straits in the past couple of years. But we have made it through. And considering the tide from the Asian financial crisis that washed around the world, the Canadian economy has coped better this time around than in the past. Content Type(s): Press, Speeches and appearances, Remarks
May 4, 1999 Bank Rate Lowered by ¼ Percentage Point to 4¾ Per Cent Media Relations Ottawa, Ontario The Bank of Canada today lowered its Bank Rate by ¼ of one per cent to 4¾ per cent. Content Type(s): Press, Press releases
May 4, 1999 Bank of Canada Governor speaks to La Chambre de commerce de la région sherbrookoise Media Relations Sherbrooke, Quebec The Canadian economy has come through the financial volatility and global economic slowdown of the past few years quite well and has started 1999 on a strong note, Bank of Canada Governor Gordon Thiessen told members of La Chambre de Commerce de la région sherbrookoise today. Content Type(s): Press, Press releases
Uncovering Inflation Expectations and Risk Premiums From Internationally Integrated Financial Markets Staff Working Paper 1999-6 Ben Fung, Scott Mitnick, Eli Remolona Theory and empirical evidence suggest that the term structure of interest rates reflects risk premiums as well as market expectations about future inflation and real interest rates. We propose an approach to extracting such premiums and expectations by exploiting both the comovements among interest rates across the yield curve and between two countries, Canada and […] Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, Inflation and prices, Interest rates, International topics JEL Code(s): E, E4, E43, G, G1, G12, G15
April 20, 1999 Opening Statement before the Standing Senate Committee on Banking, Trade and Commerce Opening statement Gordon Thiessen Standing Senate Committee on Banking, Trade and Commerce Since we have recently tabled the Bank of Canada’s Annual Report in Parliament, I would also be happy to answer any questions you may have about our stewardship of the Bank. Content Type(s): Press, Speeches and appearances, Opening statements
Real Effects of Collapsing Exchange Rate Regimes: An Application to Mexico Staff Working Paper 1999-10 Patrick Osakwe, Lawrence L. Schembri This paper examines the impact of a collapsing exchange rate regime on output in an open economy in which shocks to capital flows and exports predominate. A sticky-price rational expectations model is used to compare the variability of output under the collapsing regime to that under alternative fixed and flexible regimes. Output is found to […] Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates JEL Code(s): F, F3, F31, F4, F41
Measuring Potential Output within a State-Space Framework Staff Working Paper 1999-9 Maral Kichian In this paper we measure potential output (and consequently the output gap) using state-space models. Given that the estimated output gap is used as an indicator to measure the extent of inflationary pressures in the economy, we evaluate the use of such models for the implementation of monetary policy. Our starting point is the Gerlach […] Content Type(s): Staff research, Staff working papers Topic(s): Potential output JEL Code(s): D, D2, D24