Exchange rates

• Characterization of the Dynamic Effects of Fiscal Shocks in a Small Open Economy

  Staff Working Paper 2004-41 Nooman Rebei

  The author studies the macroeconomic consequences of discretionary changes in the fiscal policy instruments for Canada.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Exchange rates, Fiscal policy JEL Code(s): E, E3, E32, E6, E62

• Optimal Taylor Rules in an Estimated Model of a Small Open Economy

  Staff Working Paper 2004-36 Steve Ambler, Ali Dib, Nooman Rebei

  The authors compute welfare-maximizing Taylor rules in a dynamic general-equilibrium model of a small open economy.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Exchange rates, Inflation targets JEL Code(s): F, F2, F3, F31, F33

• Exchange Rate Pass-Through and the Inflation Environment in Industrialized Countries: An Empirical Investigation

  Staff Working Paper 2004-21 Jeannine Bailliu, Eiji Fujii

  This paper investigates the question of whether a transition to a low-inflation environment, induced by a shift in monetary policy, results in a decline in the degree of pass-through of exchange rate movements to consumer prices.

  Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Inflation and prices, International topics JEL Code(s): E, E3, E31, E4, E42, F, F3, F31
• May 22, 2004

  Exchange Rate Pass-Through in Industrialized Countries

  Bank of Canada Review - Spring 2004 Jeannine Bailliu, Hafedh Bouakez

  Economists' long-standing interest in the degree to which exchange rate movements are reflected in prices was rekindled in the 1970s by a combination of rising inflation and the adoption of more flexible exchange rate regimes in many industrialized countries. Specifically, there were concerns that a large currency depreciation could degenerate into an inflationary spiral. Such fears were curtailed in the 1980s and early 1990s as industrialized countries began to reduce and stabilize their inflation rates. The low-inflation period most industrialized countries entered approximately a decade ago coincided with significant exchange rate depreciations that had much smaller effects on consumer prices than expected. This led to a belief that the extent to which exchange rate movements are passed through to consumer prices has declined. In this article, the authors examine why pass-through could be incomplete and review empirical estimates to determine whether pass-through has indeed declined, suggesting possible reasons for this decline and discussing the implications for monetary policy.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rates, Inflation and prices, Monetary policy framework

• When Bad Things Happen to Good Banks: Contagious Bank Runs and Currency Crises

  Staff Working Paper 2004-18 Raphael Solomon

  The author develops a twin crisis model featuring multiple banks.

  Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Financial institutions JEL Code(s): E, E5, E58, F, F3, F30, G, G2, G21