Monetary policy

• Time-Consistent Management of a Liquidity Trap with Government Debt

  Staff Working Paper 2018-38 Dmitry Matveev

  This paper studies optimal discretionary monetary and fiscal policy when the lower bound on nominal interest rates is occasionally binding in a model with nominal rigidities and long-term government debt. At the lower bound it is optimal for the government to temporarily reduce debt.

  Content Type(s): Staff research, Staff working papers Topic(s): Fiscal policy, Monetary policy JEL Code(s): E, E5, E52, E6, E62, E63

• The Extensive Margin of Trade and Monetary Policy

  Staff Working Paper 2018-37 Yuko Imura, Malik Shukayev

  This paper studies the effects of monetary policy shocks on firms’ participation in exporting. We develop a two-country dynamic stochastic general equilibrium model in which heterogeneous firms make forward-looking decisions on whether to participate in the export market and prices are staggered across firms and time.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Firm dynamics, International topics, Monetary policy JEL Code(s): E, E5, E52, F, F1, F12, F4, F44

• Central Bank Digital Currency and Monetary Policy

  Staff Working Paper 2018-36 Mohammad Davoodalhosseini

  Many central banks are contemplating whether to issue central bank digital currency. This piece explores the implications as well as potential motivators of such a step.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Monetary policy JEL Code(s): E, E4, E42, E5, E50

• Following the Money: Evidence for the Portfolio Balance Channel of Quantitative Easing

  Staff Working Paper 2018-33 Itay Goldstein, Jonathan Witmer, Jing Yang

  Recent research suggests that quantitative easing (QE) may affect a broad range of asset prices through a portfolio balance channel. Using novel security-level holding data of individual US mutual funds, we establish evidence that portfolio rebalancing occurred both within and across funds.

  Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy, Monetary policy implementation, Monetary policy transmission JEL Code(s): E, E5, E58, G, G2, G23

• The Neutral Rate in Canada: 2018 Estimates

  Staff Analytical Note 2018-22 Xin Scott Chen, José Dorich

  The neutral nominal policy rate serves as a benchmark for assessing the degree of monetary stimulus and provides a medium- to long-run anchor for the policy rate. Since quantitative measures of the neutral rate are subject to considerable uncertainty, Bank staff rely on four different approaches to estimate the Canadian neutral rate.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Economic models, Interest rates, Monetary policy JEL Code(s): E, E4, E40, E43, E5, E50, E52, E58, F, F4, F41