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369
result(s)
March 18, 2008
Canada's Experience with a Flexible Exchange Rate in the 1950s: Valuable Lessons Learned
Schembri studies Canada's post-World War II experience in introducing a floating exchange rate, including its effects on the Canadian economy and its influence on the development of macroeconomic theory. In particular, Canada's flexible exchange rate and high degree of capital mobility with the United States provided an unprecedented experiment for macroeconomic policy. The successes and difficulties encountered by Canadian authorities in managing monetary and fiscal policy under this regime drew the interest of researchers at the International Monetary Fund and elsewhere and had a significant impact on the development of the Mundell-Fleming model, the path-breaking innovation in modern open-economy macroeconomics.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Central bank research,
Exchange rate regimes,
Monetary policy framework
Inflation Targeting and Price-Level-Path Targeting in the GEM: Some Open Economy Considerations
Staff Working Paper 2008-6
Donald Coletti,
René Lalonde,
Dirk Muir
This paper compares the performance of simple inflation targeting (IT) and price-level path targeting (PLPT) rules to stabilize the macroeconomy, in response to a series of shocks, similar to those seen in Canada and the United States over the 1983 to 2004 period.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Economic models,
Inflation and prices,
Inflation: costs and benefits,
Monetary policy framework
JEL Code(s):
C,
C5,
C51,
C52,
E,
E1,
E17,
E3,
E31,
E5,
E52
Adopting Price-Level Targeting under Imperfect Credibility
Staff Working Paper 2008-3
Oleksiy Kryvtsov,
Malik Shukayev,
Alexander Ueberfeldt
This paper measures the welfare gains of switching from inflation-targeting to price-level targeting under imperfect credibility. Vestin (2006) shows that when the monetary authority cannot commit to future policy, price-level targeting yields higher welfare than inflation targeting.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Credibility,
Monetary policy framework
JEL Code(s):
E,
E3,
E31,
E5,
E52
December 14, 2007
The Costs of Inflation in New Keynesian Models
Ambler describes three new channels through which inflation affects economic welfare in New Keynesian models. These channels were absent from traditional analyses and may have caused researchers to underestimate the costs associated with variable inflation, even at relatively low levels of inflation. The article concludes with a preliminary assessment of the quantitative importance of the new channels and their significance for monetary policy.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Inflation: costs and benefits,
Monetary policy framework
December 13, 2007
Central Bank Performance under Inflation Targeting
Gosselin examines and reports on the various factors that contribute to successful inflation targeting. Using a panel of 21 inflation-targeting countries over the period 1990Q1-2007Q2, Gosselin finds that the ability of central banks to hit their targets varies considerably. Some of these differences can be explained by exchange rate fluctuations, fiscal deficits, and differences in financial development. Others are explained by differences in the targeting framework itself and the manner in which it is implemented.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Central bank research,
Inflation targets,
Monetary policy framework
December 11, 2007
The Zero Bound on Nominal Interest Rates: Implications for Monetary Policy
One of the most important factors that must be considered if countries are thinking about lowering the target level of inflation much below 2 per cent is the zero interest bound. Targeting inflation rates that are too low, the authors note, may restrict the ability of monetary policy to respond to economic shocks by limiting the amount by which interest rates can be eased.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Inflation: costs and benefits,
Interest rates,
Monetary policy implementation
December 10, 2007
Inflation Targeting, Price-Level Targeting, and Fluctuations in Canada's Terms of Trade
Coletti and Lalonde compare inflation targeting and price-level targeting in the context of a small open economy subject to sizable terms-of-trade shocks. The authors summarize recent research that compares the ability of price-level targeting and inflation targeting to stabilize the macroeconomy when confronted with shocks similar to those experienced by Canada in recent years. Their preliminary results suggest that price-level targeting may represent a feasible alternative to traditional inflation targeting. Their article also provides insight into the direction of current research in this area at the Bank.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Central bank research,
Inflation and prices,
Monetary policy framework
Price-Level Targeting and Stabilization Policy: A Review
Staff Discussion Paper 2007-11
Steve Ambler
The author surveys recent articles on the costs and benefits of price-level targeting versus inflation targeting, focusing on the benefits and costs of price-level targeting as a tool for stabilization policy. He reviews papers that examine how price-level targeting affects the short-run trade-off between output and inflation variability by influencing expectations of future inflation. The […]
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Monetary policy framework
JEL Code(s):
E,
E3,
E31,
E32,
E5,
E52
Price-Level Targeting
Staff Discussion Paper 2007-8
Agathe Côté
In November 2006, the Bank of Canada announced its intention to lead a concerted research program over the next few years on the type of monetary policy framework that would best contribute to the economic well-being of Canadians in the decades ahead. The research will focus on two broad questions: whether economic welfare might be […]
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Monetary policy framework
JEL Code(s):
E,
E5,
E52,
E58