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2333
result(s)
April 9, 2009
Next Steps for Canadian Monetary Policy
In 2006, the Bank initiated a research program exploring two alternatives to the current inflation-targeting framework: (i) lowering the inflation target and (ii) shifting to a price-level target. This article discusses progress to date, places the Bank's findings in the context of a broader literature, and identifies avenues for future research.
April 8, 2009
Price-Level Targeting and Stabilization Policy: A Review
This article reviews arguments in the literature for and against price-level targeting, focusing on its costs and benefits compared with inflation targeting. Benefits of price-level targeting include the effect on forward-looking inflation expectations; the ability to substitute for commitment by a central bank to its future policies; lessening forecast errors; better economic performance in response to real shocks because of lower wage indexation; and a reduction in the problem of the zero lower bound on nominal interest rates.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Inflation and prices,
Inflation: costs and benefits,
Monetary policy framework
April 7, 2009
Price-Level Uncertainty, Price-Level Targeting, and Nominal Debt Contracts
Many central banks around the world have embraced inflation targeting as a monetary policy framework. Interest is growing, however, in price-level targeting as an alternative. The choice of frameworks has important consequences for financial contracts, most of which are not fully indexed to the price level. Changes in the price level therefore lead to changes in the real value of contracts.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Inflation targets,
Inflation: costs and benefits,
Monetary policy framework
April 5, 2009
Unexpected Inflation and Redistribution of Wealth in Canada
One of the most important arguments in favour of price stability is that unexpected inflation generates changes in the distribution of income and wealth among different economic agents. These redistributions occur because many loans are specified in fixed dollar terms and unexpected inflation redistributes wealth from creditors to debtors by reducing the real value of nominal assets and liabilities.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Central bank research,
Inflation and prices,
Inflation: costs and benefits,
Sectoral balance sheet
Price Movements in the Canadian Residential Mortgage Market
Staff Working Paper 2009-13
Jason Allen,
Darcey McVanel
The authors empirically analyze the price-setting behaviour of the major Canadian banks in the residential mortgage market over the period 1991–2007. They use weekly posted prices of the major mortgage providers to study the degree of competition in mortgage price setting.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Financial institutions,
Financial services
JEL Code(s):
D,
D4,
G,
G2
Complex Ownership and Capital Structure
Staff Working Paper 2009-12
Teodora Paligorova,
Zhaoxia Xu
This paper investigates the impact of pyramid ownership structure and multiple controlling shareholders on firm leverage. Pyramids, having at least one controlling shareholder and a subsidiary, rely significantly more on debt financing than non-pyramid firms.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Financial markets,
International topics
JEL Code(s):
G,
G3,
G31,
G32
Information Flows and Aggregate Persistence
Staff Working Paper 2009-11
Oleksiy Kryvtsov
Models with imperfect information that generate persistent monetary nonneutrality predominantly rely on assumptions leading to substantial heterogeneity of information across price-setters. This paper develops a quantitative general equilibrium model in which the degree of heterogeneity of information is determined endogenously.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Inflation and prices,
Monetary policy transmission
JEL Code(s):
D,
D8,
D83,
E,
E3,
E31,
E32
Computing the Accuracy of Complex Non-Random Sampling Methods: The Case of the Bank of Canada's Business Outlook Survey
Staff Working Paper 2009-10
Daniel de Munnik,
David Dupuis,
Mark Illing
A number of central banks publish their own business conditions survey based on non-random sampling methods. The results of these surveys influence monetary policy decisions and thus affect expectations in financial markets. To date, however, no one has computed the statistical accuracy of these surveys because their respective non-random sampling method renders this assessment non-trivial.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Central bank research,
Econometric and statistical methods,
Regional economic developments
JEL Code(s):
C,
C4,
C8,
C81,
C9,
C90
Assessing the Implementation of the IMF's 2007 Surveillance Decision
Staff Discussion Paper 2009-6
Robert Lavigne,
Garima Vasishtha
The International Monetary Fund (IMF) recently adopted the "2007 Decision on Bilateral Surveillance Over Members' Policies," a landmark reform that modernizes the general principles of IMF surveillance. However, support for the reform was not unanimous, and doubts have been expressed about how the Decision would be applied in practice. The authors assess the first year […]
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
International topics
JEL Code(s):
F,
F3,
F33