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369
result(s)
Asset-Price Misalignments and Monetary Policy: How Flexible Should Inflation-Targeting Regimes Be?
Staff Discussion Paper 2007-6
Jack Selody,
Carolyn A. Wilkins
The authors analyze the extent to which inflation-targeting frameworks should incorporate flexibility in order to respond to asset-price misalignments and other atypical events. They examine the costs and benefits of adding flexibility to the Bank's current inflation-targeting framework, and conclude that maintaining low and stable consumer price inflation is the best contribution that monetary policy […]
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Inflation targets,
Monetary policy framework
JEL Code(s):
E,
E5,
E6
Should Central Banks Adjust Their Target Horizons in Response to House-Price Bubbles?
Staff Discussion Paper 2007-4
Meenakshi Basant Roi,
Rhys R. Mendes
The authors investigate the implications of house-price bubbles for the optimal inflation-target horizon using a dynamic general-equilibrium model with credit frictions, house-price bubbles, and small open-economy features. They find that, given the distribution of shocks and inflation persistence over the past 25 years, the optimal target horizon for Canada tends to be at the lower […]
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Central bank research,
Credit and credit aggregates,
Economic models,
Inflation targets,
Monetary policy framework,
Monetary policy transmission
JEL Code(s):
E,
E4,
E42,
E44,
E5,
E52,
E58,
E6,
E61
Implications of New Accounting Standards for the Bank of Canada's Balance Sheet
Staff Discussion Paper 2007-2
Mark Zelmer,
Grahame Johnson
The Canadian Institute of Chartered Accountants (CICA) has implemented new accounting standards for the valuation and reporting of financial instruments. They are effective for the Bank of Canada in 2007. As a result of these changes, the Bank has begun valuing its holdings of Government of Canada treasury bills on a fair value basis and […]
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Financial institutions,
Monetary policy framework
JEL Code(s):
E,
E5,
E58,
M,
M4
Computing Optimal Policy in a Timeless-Perspective: An Application to a Small-Open Economy
Staff Working Paper 2007-32
Michel Juillard,
Florian Pelgrin
Since the contribution of Kydland and Prescott (1977), it is well known that the optimal Ramsey policy is time inconsistent. In a series of recent contributions, Woodford (2003) proposes a new methodology to circumvent this problem, namely the timeless perspective solution.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Monetary policy framework
JEL Code(s):
C,
C6,
E,
E5,
E6
Micro Foundations of Price-Setting Behaviour: Evidence from Canadian Firms
Staff Working Paper 2007-31
Daniel de Munnik,
Kuan Xu
How do firms adjust prices in the marketplace? Do they tend to adjust prices infrequently in response to changes in market conditions? If so, why? These remain key questions in macroeconomics, particularly for central banks that work to keep inflation low and stable.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation and prices,
Monetary policy transmission
JEL Code(s):
D,
D4,
D40,
E,
E3,
E30,
L,
L1,
L11
April 14, 2007
The Canadian Overnight Market: Recent Evolution and Structural Changes
Since 1997 when the Bank of Canada last published a review of the Canadian overnight market, several important changes have affected the market's structure and dynamics. Reid provides a current overview of the market, examining the financial instruments, market transparency and flows, and the collateralized overnight rate as it has evolved since the introduction of the Large Value Transfer System and the fixed announcement dates. Other significant influences include changes in market practices regarding risk management, the rise of securities lending, the increased demand for collateral, and the Bank of Canada's measures to reinforce the target for the overnight rate.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Market structure and pricing,
Monetary policy framework,
Monetary policy implementation
Term Structure Transmission of Monetary Policy
Staff Working Paper 2007-30
Sharon Kozicki,
P. A. Tinsley
Under bond-rate transmission of monetary policy, the authors show that a generalized Taylor Principle applies, in which the average anticipated path of policy responses to inflation is subject to a lower bound of unity. This result helps explain how bond rates may exhibit stable responses to inflation, even in periods of passive policy.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Interest rates,
Monetary policy transmission
JEL Code(s):
E,
E3,
E5,
N,
N1
Optimal Monetary Policy and Price Stability Over the Long-Run
Staff Working Paper 2007-26
Oleksiy Kryvtsov,
Malik Shukayev,
Alexander Ueberfeldt
This paper examines the role of monetary policy in an environment with aggregate risk and incomplete markets. In a two-period overlapping-generations model with aggregate uncertainty and nominal bonds, optimal monetary policy attains the ex-ante Pareto optimal allocation.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Monetary policy framework
JEL Code(s):
E,
E5
The Zero Bound on Nominal Interest Rates: Implications for the Optimal Monetary Policy in Canada
Staff Discussion Paper 2007-1
Claude Lavoie,
Hope Pioro
The authors assess the performance of the Canadian economy under a variety of interest rate rules when the zero bound on nominal interest rates can bind. Their assessment is based on numerical simulations of a dynamic stochastic general-equilibrium model in a stochastic environment. Consistent with the literature, the authors find that the probability and consequences […]
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Inflation: costs and benefits,
Interest rates,
Monetary policy framework
JEL Code(s):
E,
E4,
E43,
E47,
E5,
E52