Césaire Meh - Latest

• February 23, 2012

  Household Borrowing and Spending in Canada

  Bank of Canada Review - Winter 2011-2012 Jeannine Bailliu, Katya Kartashova, Césaire Meh

  Understanding how much of the increased debt load of Canadian households has been used to finance household spending on consumption and home renovation is important for the conduct of monetary policy. In this article, the authors use a comprehensive data set that provides information on the uses of debt by Canadian households. They first present some facts regarding the evolution of Canadian household debt over the period from 1999 to 2010, emphasizing the increased importance of debt flows that are secured by housing. They then explore how Canadian households have used their borrowed funds over the same period, and assess the role of these borrowed funds in financing total consumption and spending on home renovation. Finally, they examine the possible effects of a decline in house prices on consumption when housing equity is used as collateral against household indebtedness.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Credit and credit aggregates, Domestic demand and components, Monetary policy transmission JEL Code(s): E, E2, E21, E5, E51, H, H3, H31

• Bank Leverage Regulation and Macroeconomic Dynamics

  Staff Working Paper 2011-32 Ian Christensen, Césaire Meh, Kevin Moran

  This paper assesses the merits of countercyclical bank balance sheet regulation for the stabilization of financial and economic cycles and examines its interaction with monetary policy.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Financial institutions, Financial system regulation and policies, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E4, E44, E5, E52, G, G2, G21

• Innovation and Growth with Financial, and Other, Frictions

  Staff Working Paper 2011-25 Jonathan Chiu, Césaire Meh, Randall Wright

  The generation and implementation of ideas, or knowledge, is crucial for economic performance. We study this process in a model of endogenous growth with frictions.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Potential output, Productivity JEL Code(s): E, E4, G, G2, O, O3, O4
• August 18, 2011

  Bank Balance Sheets, Deleveraging and the Transmission Mechanism

  Bank of Canada Review - Summer 2011 Césaire Meh

  The author investigates the influence of bank capital on economic activity, using a macroeconomic model that incorporates an explicit role for financial intermediation. The analysis focuses on the role of a “bank-capital channel” in propagating and amplifying monetary policy actions and other shocks. The question of whether weaker bank balance sheets make the economy more vulnerable to adverse shocks is examined, together with the impact of initiatives, such as countercyclical capital buffers, on the transmission of monetary policy and other shocks to the real economy.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Economic models, Financial institutions, Financial system regulation and policies, Monetary policy transmission

• Leverage, Balance Sheet Size and Wholesale Funding

  Staff Working Paper 2010-39 H. Evren Damar, Césaire Meh, Yaz Terajima

  Some evidence points to the procyclicality of leverage among financial institutions leading to aggregate volatility. This procyclicality occurs when financial institutions finance their assets with non-equity funding (i.e., debt financed asset expansions). Wholesale funding is an important source of market-based funding that allows some institutions to quickly adjust their leverage.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial stability, Financial system regulation and policies, Recent economic and financial developments JEL Code(s): G, G2, G21, G28
• August 19, 2010

  Should Monetary Policy Be Used to Counteract Financial Imbalances?

  Bank of Canada Review - Summer 2010 Jean Boivin, Césaire Meh, Timothy Lane

  The authors examine whether monetary policy should and could do more to lean against financial imbalances (such as those associated with asset-price bubbles or unsustainable credit expansion) as they are building up, or whether its role should be limited to cleaning up the economic consequences as the imbalances unwind.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Financial system regulation and policies, Monetary policy framework

• Household Debt, Assets, and Income in Canada: A Microdata Study

  Staff Discussion Paper 2009-7 Césaire Meh, Yaz Terajima, David Xiao Chen, Thomas J. Carter

  The authors use microdata from the 1999 and 2005 Surveys of Financial Security to identify changes in household debt, and discuss their potential implications for monetary policy and financial stability. They document an increase in the debt-income ratio, which rose from 0.75 to 0.95, on average.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Credit and credit aggregates, Financial stability, Productivity, Sectoral balance sheet JEL Code(s): E, E2, E21, E24

• Real Effects of Price Stability with Endogenous Nominal Indexation

  Staff Working Paper 2009-16 Césaire Meh, Vincenzo Quadrini, Yaz Terajima

  We study a model with repeated moral hazard where financial contracts are not fully indexed to inflation because nominal prices are observed with delay as in Jovanovic & Ueda (1997).

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Financial markets, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E2, E21, E3, E31, E4, E44, E5, E52
• April 7, 2009

  Price-Level Uncertainty, Price-Level Targeting, and Nominal Debt Contracts

  Bank of Canada Review - Spring 2009 Allan Crawford, Césaire Meh, Yaz Terajima

  Many central banks around the world have embraced inflation targeting as a monetary policy framework. Interest is growing, however, in price-level targeting as an alternative. The choice of frameworks has important consequences for financial contracts, most of which are not fully indexed to the price level. Changes in the price level therefore lead to changes in the real value of contracts.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Inflation targets, Inflation: costs and benefits, Monetary policy framework
• April 5, 2009

  Unexpected Inflation and Redistribution of Wealth in Canada

  Bank of Canada Review - Spring 2009 Césaire Meh, Yaz Terajima

  One of the most important arguments in favour of price stability is that unexpected inflation generates changes in the distribution of income and wealth among different economic agents. These redistributions occur because many loans are specified in fixed dollar terms and unexpected inflation redistributes wealth from creditors to debtors by reducing the real value of nominal assets and liabilities.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Central bank research, Inflation and prices, Inflation: costs and benefits, Sectoral balance sheet