Credibility

• March 6, 2020

  Evaluating our approach to monetary policy

  

  James (Jim) C. MacGee, Rhys R. Mendes

  Inflation targeting has been successful in Canada over the past 30 years. But is it the best we can do? The Bank of Canada asks itself, and Canadians, that question every five years.

  Content Type(s): Publications, The Economy, Plain and Simple Topic(s): Credibility, Inflation targets, Inflation: costs and benefits, Interest rates, Monetary policy framework, Price stability

• The Power of Helicopter Money Revisited: A New Keynesian Perspective

  Staff Discussion Paper 2020-1 Thomas J. Carter, Rhys R. Mendes

  We analyze money financing of fiscal transfers (helicopter money) in two simple New Keynesian models: a “textbook” model in which all money is non-interest-bearing (e.g., all money is currency), and a more realistic model with interest-bearing reserves.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Credibility, Economic models, Fiscal policy, Inflation targets, Interest rates, Monetary policy, Monetary policy and uncertainty, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E1, E12, E4, E41, E43, E5, E51, E52, E58, E6, E61, E63

• Social Learning and Monetary Policy at the Effective Lower Bound

  Staff Working Paper 2020-2 Jasmina Arifovic, Alex Grimaud, Isabelle Salle, Gauthier Vermandel

  This research develops a model in which the economy is directly influenced by how pessimistic or optimistic economic agents are about the future. The agents may hold different views and update them as new economic data become available.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Central bank research, Credibility, Economic models, Monetary policy, Monetary policy communications JEL Code(s): C, C8, C82, E, E3, E32, E5, E52

• Furor over the Fed : Presidential Tweets and Central Bank Independence

  Staff Analytical Note 2019-33 Antoine Camous, Dmitry Matveev

  We illustrate how market data can be informative about the interactions between monetary and fiscal policy. Federal funds futures are private contracts that reflect investor’s expectations about monetary policy decisions.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Central bank research, Credibility, Financial markets, Monetary policy JEL Code(s): E, E4, E44, E5, E52, E58

• Inflation Targeting and Liquidity Traps Under Endogenous Credibility

  Staff Working Paper 2019-9 Cars Hommes, Joep Lustenhouwer

  Policy implications are derived for an inflation-targeting central bank, whose credibility is endogenous and depends on its past ability to achieve its targets. This is done in a New Keynesian framework with heterogeneous and boundedly rational expectations.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Credibility, Monetary policy JEL Code(s): C, C6, C62, E, E3, E32, E5, E52
• February 21, 2019

  Price check: Inflation in Canada

  Sharon Kozicki, Jill Vardy, Laurence Savoie-Chabot

  Why prices change, and what it means for the economy.

  Content Type(s): Publications, The Economy, Plain and Simple Topic(s): Business fluctuations and cycles, Credibility, Expectations, Inflation and prices, Inflation targets, Inflation: costs and benefits, Monetary policy framework, Monetary policy transmission, Price stability

• Limited Commitment, Endogenous Credibility and the Challenges of Price-level Targeting

  Staff Working Paper 2018-61 Gino Cateau, Malik Shukayev

  This paper studies the cost of limited commitment when a central bank has the discretion to adjust policy whenever the costs of honoring its past commitments become high. Specifically, we consider a central bank that seeks to implement optimal policy in a New Keynesian model by committing to a price-level target path.

  Content Type(s): Staff research, Staff working papers Topic(s): Credibility, Inflation targets, Monetary policy framework JEL Code(s): E, E3, E31, E5, E52

• Credibility, Flexibility and Renewal: The Evolution of Inflation Targeting in Canada

  Staff Discussion Paper 2018-18 Thomas J. Carter, Rhys R. Mendes, Lawrence L. Schembri

  In 1991, Canada became the second country to adopt an inflation target as a central pillar of its monetary policy framework. The regime has proven much more successful than initially expected, both in achieving price stability and in stabilizing the real economy against a wide range of shocks.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Credibility, Inflation targets, Monetary policy, Monetary policy framework JEL Code(s): E, E5, E52, E58, E6, E61
• September 28, 2018

  Welcome to The Economy, Plain and Simple

  

  Donald Coletti

  The economy starts with you.

  Content Type(s): Publications, The Economy, Plain and Simple Topic(s): Credibility, Monetary policy communications, Recent economic and financial developments

• Readability and the Bank of Canada

  Staff Analytical Note 2018-20 Alexandre Deslongchamps

  In this note, I assess the readability of Bank of Canada publications using a formula commonly used for this type of evaluation. I find that Bank publications are more difficult to read than the media articles and other content our target audiences likely consume. This suggests that more simple writing can help the Bank better meet its communication objectives.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Credibility, Monetary policy communications JEL Code(s): D, D8, D83