John Murray was appointed Deputy Governor of the Bank of Canada in January 2008. In this capacity, he is one of two deputy governors responsible for overseeing the Bank's analysis of domestic and international economic developments in support of monetary policy decisions. As a member of the Bank's Governing Council, he shares responsibility for decisions with respect to monetary policy and financial system stability, and for setting the strategic direction of the Bank.
Born in Toronto, Mr. Murray received a bachelor of commerce degree from Queen's University in 1971, as well as an MA in economics and a PhD in economics from Princeton University in 1974 and 1977, respectively.
After completing his PhD, Mr. Murray taught at the University of British Columbia as an assistant professor and at the University of North Carolina as a visiting assistant professor. From 1985 to 1986, he also lectured at Princeton University.
Mr. Murray joined the Bank of Canada in 1980 as a Senior Economist with the Monetary and Financial Analysis Department. In 1981, he was promoted to the position of Research Officer, and in 1982, he became Assistant Chief of the department. He served as Research Adviser in the Monetary and Financial Analysis and International departments from 1984 to 1987. In 1987, he was appointed Deputy Chief of the International Department, and in 1990, Chief. Mr. Murray became an Adviser to the Governor in January 2000.
Deputy Governor John Murray discusses the urgent need to rotate global demand.
Deputy Governor John Murray discusses global growth and rebalancing.
Deputy Governor John Murray discusses monetary policy decision-making at the Bank of Canada.
Deputy Governor John Murray discusses the importance of global economic policy coordination in a speech at the State University of New York College in Plattsburgh, New York.
In remarks to the Lethbridge Chamber of Commerce, Deputy Governor John Murray discusses the work of the Bank of Canada and its economic outlook.
Commodity prices are once again making headlines. Some commodity prices, such as those for copper and cattle, have reached record highs; others are rising quickly and approaching previous peaks.
I am honoured to address members of the Canadian Association for Business Economics. My remarks today will focus on critical issues that the Bank of Canada has studied over the past four years and how this research will inform our work as we move forward post crisis.
As the title of the conference suggests, we have seen many boom-and-bust cycles in the commodity sector. This raises one obvious and central question: How can we avoid them in the future?
The financial turbulence that began in the U.S. subprime-mortgage market in August 2007 reached maximum intensity towards the end of 2008, and enveloped the entire global economy. Strains that had previously been concentrated in a few major financial centers turned into a full-blown crisis, affecting both industrial and emerging-market economies through trade, financial, and confidence channels.
These past few months have been busy for central bankers, to say the least, and the past few days are certainly no exception. While developments on Wall Street have garnered much attention, the cost of living has also been an issue for us all, whether we're buying gas at the pumps, booking an airline ticket, or just picking up a loaf of bread at the grocery store.
Building on an earlier Review article, the authors critically reassess the premise that exchange rate pass-through (ERPT) has declined in light of recent studies of the issue in the context of a dynamic stochastic general-equilibrium framework. This recent work helps to emphasize the pitfalls of previous studies based on reduced-form models. For example, ERPT to import prices may be larger than the estimated parameters of reduced-form models would indicate. On the other hand, the authors find fairly convincing evidence that measured short-run ERPT to consumer prices has declined because of a shift to more credible monetary policy regimes. In this case, the findings from DSGE models confirm the results from reduced-form models. Insights from recent studies of ERPT based on microdata are examined, and policy implications are discussed.
: Economic models; Exchange rates; Inflation and prices; Monetary policy frameworkThe inflation targeting framework that Canada introduced in 1991 has played a significant role in the exceptional economic performance that the country has experienced in recent years. Understanding the factors that have contributed to the success of the current inflation-targeting framework, and investigating the various ways in which it might be improved in the future, are an important part of the Bank of Canada's medium-term research program.
The authors revisit the relationship between energy prices and the Canadian dollar in the Amano and van Norden (1995) equation, which shows a negative relationship such that higher real energy prices lead to a depreciation of the Canadian dollar.
: Econometric and statistical methods; Exchange ratesThe authors describe a special survey of the payment and financial-reporting practices of Canadian firms conducted by the Bank of Canada's regional offices to determine if the U.S. dollar has started to displace the Canadian dollar as a preferred unit of account. A cross-section of firms was asked what currency (or currencies) they used: (i) for quoting sales to Canadian customers, (ii) for quoting prices to foreigners, (iii) for reporting their financial results, and (iv) for quoting salaries and wages. The survey results reported here extend some earlier results reported in a previous Review article by Murray and Powell.
The data indicate that, despite the dominance of the U.S. dollar in world trade and as an international standard of value, use of the U.S. dollar in Canada is very limited. The vast majority of Canadian firms price their products and keep their financial statements in Canadian dollars, and very few workers in Canada have their salaries paid in a foreign currency. The Canadian dollar is still strongly preferred for most pricing and financial-reporting activities in Canada, and there is very little evidence of "dollarization."
: Exchange rate regimesA series of major international financial crises in the 1990s, and the recent introduction of the euro, have renewed interest in alternative exchange rate systems. The choice of exchange rate regime is particularly relevant for emerging-market countries because other countries are perceived either as having no alternative to their current exchange rate arrangement or as highly unlikely to change.
This article examines the evolution of exchange rate regimes in emerging markets over the past decade and compares the strengths and weaknesses of the various available systems. These include intermediate regimes, such as the adjustable pegged exchange rate popular throughout much of the post—war period, and the two extreme exchange rate regimes: permanently fixed or freely floating exchange rate regimes. Two recently proposed alternatives are also evaluated: the Managed Floating Plus and Baskets, Bands, and Crawling Pegs. Both try to combine the best elements of the flexible and fixed exchange rate systems, but the Managed Floating Plus is deemed to be the more promising alternative.
: Development economics; Exchange rate regimesThe sharp depreciation of the Canadian dollar and the successful launch of the euro have sparked a lively debate in Canada about the possible benefits of formally adopting the U.S. dollar as our national currency. Some observers have suggested that this debate is largely irrelevant, since Canada is already highly "dollarized." Canadian businesses and households, they assert, often use the U.S. dollar to perform standard money functions in preference to their own currency. Very little evidence has been provided, however, to support these claims.
The authors review the available data with a view to drawing some tentative conclusions about the extent to which Canada has already been informally dollarized. The evidence suggests that many of the concerns that have been expressed about the imminent demise of the Canadian dollar have been misplaced. The Canadian dollar continues to be used as the principal unit of account, medium of exchange, and store of value within our borders. Moreover, there is no indication that dollarization is likely to take hold in the foreseeable future. Indeed, in many respects, the Canadian economy is less dollarized now than it was 20 years ago.
: Exchange rate regimesThe sharp depreciation of the Canadian dollar and the successful launch of the euro have spawned an animated debate in Canada concerning the potential benefits of formally adopting the U.S. dollar as our national currency.
: Exchange rate regimesThis paper examines the behaviour of the Canadian dollar from 1997 to 1999 to see if there is any evidence of excess volatility or significant overshooting. A small econometric model of the exchange rate, based on market fundamentals, is presented and used to make tentative judgments about the extent to which the currency might have been systematically over- or undervalued.
: Exchange rate regimes; Exchange ratesIncreased interest has been shown in recent months regarding the feasibility and potential advantages of a common currency for Canada and the United States. This paper explores the arguments for and against such an arrangement and attempts to determine whether it would offer any significant advantages for Canada compared with the present flexible exchange rate [...]
: Exchange ratesGreater intervention by the public sector is often proposed as a solution to the increased speculation and excessive price volatility thought to characterize today's competitive world financial system.
: Exchange ratesWhen the major industrial countries decided to move to a system of managed flexible exchange rates following the collapse of the Bretton Woods system, many observers thought that this would reduce, if not eliminate, the need for official foreign exchange market intervention. During the past fifteen years, however, intervention in most countries, including Canada, has [...]
: Exchange ratesThis paper examines the implications of increased international capital mobility and asset substitutability for domestic monetary policy in a small open economy such as Canada. Alternative definitions of international financial market integration are presented and tested in the context of two popular macro models. In the main, results suggest that interest rate relationships in Canada [...]
: Interest rates; International topicsThe authors use vector autoregression (VAR) modelling techniques to examine the response of the domestic economy to foreign influences and to quantify some of the concepts and relationships relating to economic interdependence. Particular attention is given to the dynamic behaviour and interactions of the U.S. and Canadian economies over the past twenty years. Extensive empirical [...]
: International topics
