E4 - Money and Interest Rates
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Examining Simple Joint Macroeconomic and Term-Structure Models: A Practitioner's Perspective
The primary objective of this paper is to compare a variety of joint models of the term structure of interest rates and the macroeconomy. -
Endogenously Segmented Asset Market in an Inventory Theoretic Model of Money Demand
This paper studies the effects of monetary policy in an inventory theoretic model of money demand. In this model, agents keep inventories of money, despite the fact that money is dominated in rate of return by interest bearing assets, because they must pay a fixed cost to transfer funds between the asset market and the goods market. -
Liquidity, Redistribution, and the Welfare Cost of Inflation
This paper studies the long run welfare costs of inflation in a micro-founded model with trading frictions and costly liquidity management. -
Unanticipated Defaults and Losses in Canada's Large-Value Payments System, Revisited
Recent work at the Bank of Canada studied the impact of default in Canada’s large-value payments system, and concluded that participants could readily manage their potential losses (McVanel 2005). In an extension of that work, the authors use a much larger set of daily payments data – with three times as many observations – to […] -
Cross-Country Estimates of the Degree of Fiscal Dominance and Central Bank Independence
This paper studies the interdependence between fiscal and monetary policies, and their joint role in the determination of the price level. -
Gold Prices and Inflation
Using data for 14 countries over the 1994 to 2005 period, we assess the leading indicator properties of gold at horizons ranging from 6 to 24 months. -
Should Central Banks Adjust Their Target Horizons in Response to House-Price Bubbles?
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 […] -
Modelling Payments Systems: A Review of the Literature
Payments systems play a fundamental role in an economy by providing the mechanisms through which payments arising from transactions can be settled. The existing literature on the economics of payments systems is large but loosely organized, in that each model uses a distinct set-up and sometimes a distinct equilibrium concept. -
Corporate Balance Sheets in Developed Economies: Implications for Investment
In this paper, the authors examine the aggregate national balance-sheets of non-financial corporations in Australia and the G7 countries with a view to assessing both their financial structure and their financial position. More importantly, the authors investigate whether the financial position of non-financial corporations (i.e., debt-to-equity ratio) is material to the economy's investment prospects and whether the importance of this channel differs depending on the structure of corporate financing i.e., bank-based or market-oriented financing structures.