Monetary policy framework

• June 17, 2019

  The merits of a floating exchange rate

  Speech summary Lawrence L. Schembri Economics Society of Northern Alberta (ESNA) Edmonton, Alberta

  Deputy Governor Lawrence Schembri explains how Canada’s monetary policy framework—inflation targeting underpinned by a flexible exchange rate—has proved to be the most durable in the post-war period.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Exchange rate regimes, Exchange rates, Financial markets, Inflation targets, Monetary policy framework

• Bank Market Power and Central Bank Digital Currency: Theory and Quantitative Assessment

  Staff Working Paper 2019-20 Jonathan Chiu, Mohammad Davoodalhosseini, Janet Hua Jiang, Yu Zhu

  We show that issuing a deposit-like central bank digital currency (CBDC) with a proper interest rate would encourage banks to pay higher interest to keep their customers. Banks would then attract more deposits and offer more loans. Hence, a CBDC would not necessarily crowd out private banking.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Market structure and pricing, Monetary policy, Monetary policy framework JEL Code(s): E, E5, E50, E58

• Labor Mobility in a Monetary Union

  Staff Working Paper 2019-15 Daniela Hauser, Martin Seneca

  The optimal currency literature has stressed the importance of labor mobility as a precondition for the success of monetary unions. But only a few studies formally link labor mobility to macroeconomic adjustment and policy. In this paper, we study macroeconomic dynamics and optimal monetary policy in an economy with cyclical labor flows across two distinct regions that share trade links and a common monetary framework.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Labour markets, Monetary policy framework, Regional economic developments JEL Code(s): E, E3, E32, E5, E52, F, F4
• 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
• February 21, 2019

  Toward 2021: The Power—and Limitations—of Policy

  Remarks Stephen S. Poloz The Chamber of Commerce of Metropolitan Montreal Montréal, Quebec

  Governor Poloz explains that monetary policy is a powerful tool to promote economic welfare, but it also has some important limits.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Central bank research, Financial stability, Inflation targets, Monetary policy and uncertainty, Monetary policy framework, Recent economic and financial developments
• February 21, 2019

  Monetary policy brings benefits—but has limits

  Speech summary Stephen S. Poloz Montréal, Quebec

  In his first speech of 2019, Governor Stephen S. Poloz explains that monetary policy is a powerful tool to promote our economic welfare. But he also notes that it has some key limits that need to be better understood in the face of uncertainty.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Inflation targets, Monetary policy framework

• 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
• November 20, 2018

  Choosing the Best Monetary Policy Framework for Canada

  Remarks Carolyn A. Wilkins McGill University Max Bell School of Public Policy Montréal, Quebec

  Senior Deputy Governor Carolyn A. Wilkins discusses public policy issues around monetary policy frameworks and how those issues have become more complex in the post-global financial crisis world.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Central bank research, Fiscal policy, Inflation and prices, Inflation targets, Interest rates, Monetary policy framework

• Assessing the Impact of Demand Shocks on the US Term Premium

  Staff Discussion Paper 2018-7 Russell Barnett, Konrad Zmitrowicz

  During and after the Great Recession of 2008–09, conventional monetary policy in the United States and many other advanced economies was constrained by the effective lower bound (ELB) on nominal interest rates. Several central banks implemented large-scale asset purchase (LSAP) programs, more commonly known as quantitative easing or QE, to provide additional monetary stimulus.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Financial markets, Interest rates, Monetary policy framework, Monetary policy implementation, Monetary policy transmission JEL Code(s): E, E4, E43, E5, E52, E58, E6, E61, E65, G, G1, G12