Paul Masson


Commodities and Monetary Policy: Implications for Inflation and Price Level Targeting

We examine the relative ability of simple inflation targeting (IT) and price level targeting (PLT) monetary policy rules to minimize both inflation variability and business cycle fluctuations in Canada for shocks that have important consequences for global commodity prices.

Are Bygones not Bygones? Modeling Price Level Targeting with an Escape Clause and Lessons from the Gold Standard

Staff Working Paper 2008-27 Paul Masson, Malik Shukayev
Like the gold standard, price level targeting (PT) involves not letting past deviations of inflation be bygones; both regimes return the price level (or price of gold) to its target. The experience of suspension of the gold standard in World War I, resumption in the 1920s (for some countries at a different parity), and final abandonment is reviewed.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Credibility, Monetary policy framework JEL Code(s): E, E3, E31, E5, E52

June 19, 2008 China's Integration into the Global Financial System

Despite having the world's largest GDP when measured in terms of purchasing-power parities, the third-largest share in world exports, and the world's largest foreign exchange reserves, China has only a minor role in the global financial system. Its banks have a modest international presence; China's currency, the renminbi, is virtually not used outside the country; and Chinese capital markets are not a significant source of financing for foreign borrowers. China's modest level of integration into the global financial system is explained by the emphasis given to domestic policy priorities. As the Chinese economy matures, and as reforms strengthen the domestic financial system, China will become more important in global financial markets. Changes are already occurring as China's financial might is being channeled towards overseas investments, and the authorities have committed to greater exchange rate flexibility. These changes will facilitate integration into the global financial system. In this article, the authors describe the current situation and speculate on the future evolution of Chinese financial institutions and markets.

La non-neutralité du mode de financement du gouvernement

Technical Report No. 36 Paul Masson
It has long been a subject of debate among economists as to whether different methods of financing government expenditures—issuing bonds or raising taxes—will bring about different effects on the economy. The purpose of this technical report is to quantify the substitution effects brought about by tax rate changes and to see to what extent they […]
Content Type(s): Technical Reports Topic(s): Debt Management JEL Code(s): H, H6, H60

Asset Stocks and the Use of Monetary and Fiscal Policies to Reduce Inflation

Technical Report No. 35 Paul Masson
This paper analyzes the dynamic behaviour of a country's economy under different policy regimes, by examining the cyclical effects that occur when certain intermediate macroeconomic targets are adopted. To highlight the differences in the adjustment paths that result, the study deliberately limits policy choice: either money supply or nominal income as targets, and either real […]

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