Central bank research

• Has the Inclusion of Forward-Looking Statements in Monetary Policy Communications Made the Bank of Canada More Transparent?

  Staff Discussion Paper 2010-15 Christine Fay, Toni Gravelle

  To investigate the extent to which the transparency of the Bank of Canada's monetary policy has improved, the authors examine empirically – over the period 30 October 2000 to 31 May 2007 – the reaction of Canadian financial markets to official Bank communications, and in particular their reaction to the recent inclusion of forward-looking policy-rate guidance in these communications.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Interest rates, Monetary policy communications, Monetary policy transmission JEL Code(s): E, E5, E52, E58

• Central Bank Haircut Policy

  Staff Working Paper 2010-23 James Chapman, Jonathan Chiu, Miguel Molico

  We present a model of central bank collateralized lending to study the optimal choice of the haircut policy. We show that a lending facility provides a bundle of two types of insurance: insurance against liquidity risk as well as insurance against downside risk of the collateral.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Financial services, Financial system regulation and policies, Monetary policy implementation, Payment clearing and settlement systems JEL Code(s): E, E4, E40, E5, E50
• August 19, 2010

  Price-Level Targeting and Relative-Price Shocks

  Bank of Canada Review - Summer 2010 Stephen Murchison

  Stephen Murchison reviews the findings of recent Bank of Canada research on the relative merits of inflation targeting and price-level targeting (PLT) for a small open economy, such as Canada's, that is susceptible to large and persistent terms-of-trade shocks.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Inflation targets, Monetary policy framework
• August 19, 2010

  Conference Summary: New Frontiers in Monetary Policy Design

  Bank of Canada Review - Summer 2010 Robert Amano, Kevin Devereux, Rhys R. Mendes

  Although the current inflation-targeting regime has served Canadians well, sound public policy demands the continuous exploration of possible improvements in the monetary policy framework.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Inflation targets, Monetary policy framework

• Statistical Confidence Intervals for the Bank of Canada's Business Outlook Survey

  Staff Discussion Paper 2010-7 Daniel de Munnik

  While a number of central banks publish their own business conditions indicators that rely on non-random sampling, knowledge about their statistical accuracy has been limited.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Business fluctuations and cycles, Central bank research, Regional economic developments JEL Code(s): C, C4, C46, C8, C81
• November 11, 2009

  Making Bank Notes Accessible for Canadians Living with Blindness or Low Vision

  Bank of Canada Review - Winter 2009-2010 Carolyn Samuel

  The ability to conduct financial transactions using bank notes is crucial to independent living. Yet this can pose significant challenges for individuals who are blind or partially sighted. This article discusses the Bank of Canada's efforts over the past 30 years to meet the accessibility needs of a specific subset of the population–Canadians living with blindness or vision loss. It also reports the findings of expert and user assessments of the suite of accessibility features on the current series of bank notes and shares plans for the next series.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Bank notes, Central bank research

• Testing for Financial Contagion with Applications to the Canadian Banking System

  Staff Working Paper 2009-14 Fuchun Li

  The author proposes a new test for financial contagion based on a non-parametric measure of the cross-market correlation. The test does not depend on the assumption that the data are drawn from a given probability distribution; therefore, it allows for maximal flexibility in fitting into the data.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Econometric and statistical methods, Financial stability JEL Code(s): C, C1, C12, G, G0, G01, G1, G15
• April 9, 2009

  Next Steps for Canadian Monetary Policy

  Bank of Canada Review - Spring 2009 Robert Amano, Thomas J. Carter, Donald Coletti

  In 2006, the Bank initiated a research program exploring two alternatives to the current inflation-targeting framework: (i) lowering the inflation target and (ii) shifting to a price-level target. This article discusses progress to date, places the Bank's findings in the context of a broader literature, and identifies avenues for future research.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Economic models, Inflation and prices, Inflation targets, Inflation: costs and benefits, Monetary policy framework
• April 5, 2009

  Unexpected Inflation and Redistribution of Wealth in Canada

  Bank of Canada Review - Spring 2009 Césaire Meh, Yaz Terajima

  One of the most important arguments in favour of price stability is that unexpected inflation generates changes in the distribution of income and wealth among different economic agents. These redistributions occur because many loans are specified in fixed dollar terms and unexpected inflation redistributes wealth from creditors to debtors by reducing the real value of nominal assets and liabilities.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Inflation and prices, Inflation: costs and benefits, Sectoral balance sheet

• Computing the Accuracy of Complex Non-Random Sampling Methods: The Case of the Bank of Canada's Business Outlook Survey

  Staff Working Paper 2009-10 Daniel de Munnik, David Dupuis, Mark Illing

  A number of central banks publish their own business conditions survey based on non-random sampling methods. The results of these surveys influence monetary policy decisions and thus affect expectations in financial markets. To date, however, no one has computed the statistical accuracy of these surveys because their respective non-random sampling method renders this assessment non-trivial.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Econometric and statistical methods, Regional economic developments JEL Code(s): C, C4, C8, C81, C9, C90