Rhys R. Mendes was appointed Managing Director of the International Economic Analysis Department (INT), effective November 1, 2017. In this capacity, he is responsible for the management and strategic direction of the department, which includes providing rigorous and timely analysis of global economic conditions as well as advice on the conduct of monetary policy and international policy issues.
Mr. Mendes joined the Bank of Canada in 2004. Four years later, he was appointed Assistant Chief of the Canadian Economic Analysis Department (CEA) where he led the team responsible for the development of ToTEM II, an updated version of the Bank’s main macroeconomic model. In 2011, he became Director of Policy Analysis in INT, where he represented Canada at G20 meetings and other international forums. He was then appointed Deputy Chief of CEA in 2013. Prior to his current role, Mr. Mendes was Managing Director of Economic and Financial Research, working with the analytic departments to develop and execute a leading-edge research work plan to support all of the Bank’s policy functions.
Throughout his career, Mr. Mendes has contributed to the Bank’s research on the monetary policy framework and is regularly consulted by foreign central banks on framework design issues. In March 2006, Mr. Mendes was on secondment to the International Monetary Fund as an advisor to the Indonesian central bank.
Born in Richmond Hill, Ontario, Mr. Mendes holds a PhD in economics from the University of Toronto.
Staff Analytical Notes
Since 2012, business investment growth has slowed considerably in advanced economies, averaging a little less than 2 per cent versus the 4 per cent growth rates experienced in the period leading up to crisis. Several recent studies have attributed a large part of the weakness in business investment to cyclical factors, including soft aggregate demand, and, to a lesser degree, heightened uncertainty and tighter financial conditions.
What path should policy-makers select for the nominal rate when faced with a liquidity trap during which the effective lower bound binds?
Conventional models imply that central banks aiming to raise inflation should lower nominal rates and thus stimulate aggregate demand. However, several economists have recently challenged this conventional wisdom in favour of an alternative “neo-Fisherian’’ view under which higher nominal rates might in fact lead to higher inflation.
Staff Discussion Papers
We analyze money financing of fiscal transfers (helicopter money) in two simple New Keynesian models: a “textbook” model in which all money is non-interest-bearing (e.g., all money is currency), and a more realistic model with interest-bearing reserves.
In 1991, Canada became the second country to adopt an inflation target as a central pillar of its monetary policy framework. The regime has proven much more successful than initially expected, both in achieving price stability and in stabilizing the real economy against a wide range of shocks.
For central banks, conducting policy in an environment of uncertainty is a daily fact of life. This uncertainty can take many forms, ranging from incomplete knowledge of the correct economic model and data to future economic and geopolitical events whose precise magnitudes and effects cannot be known with certainty.
Bank of Canada research done prior to the most recent renewal of the inflation-control agreement in 2011 concluded that the benefits associated with a target below 2 per cent were insufficient to justify the increased risk of being constrained by the zero lower bound (ZLB) on nominal interest rates.
A measure of the neutral policy interest rate can be used to gauge the stance of monetary policy. We define the neutral rate as the real policy rate consistent with output at its potential level and inflation equal to target after the effects of all cyclical shocks have dissipated.
The Latin American debt crises in the 1980s and the Asian crisis in the late 1990s both provided impetus for reforming the framework for restructuring sovereign debt. In the late 1980s, the Brady plan established the importance of substantive debt relief in addressing some crises.
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 […]
Staff Working Papers
Recent international experience with the effective lower bound on nominal interest rates has rekindled interest in the benefits of inflation targets above 2 per cent. We evaluate whether an increase in the inflation target to 3 or 4 per cent could improve macroeconomic stability in the Canadian economy.
This report provides a detailed technical description of an updated version of the Terms-of-Trade Economic Model (ToTEM II), which replaced ToTEM (Murchison and Rennison 2006) in June 2011 as the Bank of Canada’s quarterly projection model for Canada.
The Economy, Plain and Simple
March 6, 2020
Evaluating our approach to monetary policy
- “Chair’s remarks: Understanding commodity price cycles in emerging Asia and their implications for monetary policy”
In Globalisation and inflation dynamics in Asia and the Pacific, BIS Papers No. 70, pp. 67-69, January 2013, Bank for International Settlements.