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2343
result(s)
December 23, 2005
70 Years of Central Banking in Canada
Remarks by David Dodge, Governor of the Bank of Canada, to the Canadian Economics Association
Content Type(s):
Publications,
Bank of Canada Review articles
December 23, 2005
Endogenous Market Incompleteness with Investment Risks
Content Type(s):
Publications,
Financial System Review articles
December 22, 2005
70 Years of Central Banking: The Bank of Canada in an International Context, 1935–2005
Bordo and Redish examine the evolution of central banking over the past 70 years and identify periods where Canada was either a notable innovator with regard to central banking practices or appeared to be following a slightly different course. They note that global forces seemed to play an important role in determining inflation outcomes throughout the 70-year period, and that Canada and the United States experienced roughly similar inflation rates despite some important differences in their monetary policy regimes. Canada, for example, was comparatively late in establishing a central bank, launching the Bank of Canada long after most other industrial countries had one. Canada also operated under a flexible exchange rate through much of the Bretton Woods period, unlike any other country in the 1950s and early 1960s; adopted inflation targets well before most other central banks; and introduced a number of other innovative changes with regard to the implementation of monetary policy in the 1990s.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Exchange rates,
Inflation and prices,
Monetary policy framework
December 18, 2005
Free Banking and the Bank of Canada
Economists in the nineteenth century spent considerable time discussing the merits of a free-banking system, in which each commercial bank would be able to issue its own notes and deposits, subject to a convertibility requirement backed by its own gold reserves. Such a system, the proponents argued, would be able to deliver price-level stability yet be flexible enough to withstand the vicissitudes of the business cycle. Moreover, there would be no need for central banks. While this idea has received less attention in recent years, some economists still put it forward as a practical alternative to the current system. Laidler suggests that the centralizing tendencies in banking would inevitably undermine competition within a free-banking system, and lead to the natural emergence of one dominant bank. Other developments in the twentieth century, most notably the demise of the gold standard and widespread agreement that governments should play a determining role in setting monetary policy goals, have also limited the practicality of such a system. Laidler examines the Bank of Canada's history from the free-banking perspective and concludes that the current system of inflation targeting provides a much better anchor for orderly price-level behaviour than the free-banking system's convertibility could ever guarantee.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Monetary policy framework
December 8, 2005
Towards a Made-in-Canada Monetary Policy: Closing the Circle
When the Bank of Canada was first established in 1935, it had two very different models to choose from—the Bank of England and the U.S. Federal Reserve—in terms of the instruments that it might use for implementing monetary policy. Although some aspects of the Bank's early monetary policy practices, including the role of discount facilities and moral suasion, reflect the British example, other important differences shaped a distinctly Canadian approach. Chant describes what he argues are distinctively Canadian innovations: the Bank's favoured means of managing chartered bank liquidity through transfers of government deposits, the adoption of lagged reserve requirements, and the two periods in which it decided to float the Bank Rate. He also describes the series of bold initiatives that were undertaken in the 1990s with regard to simplifying clearing and settlement procedures, reducing reserve requirements, and setting the Bank's target for the overnight rate. Chant suggests that these changes have improved market efficiency, reduced risk and uncertainty, and strengthened the Bank's influence over its short-term operating target.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Monetary policy implementation
An Evaluation of MLE in a Model of the Nonlinear Continuous-Time Short-Term Interest Rate
Staff Working Paper 2005-45
Ingrid Lo
The author compares the performance of three Gaussian approximation methods - by Nowman (1997), Shoji and Ozaki (1998), and Yu and Phillips (2001) - in estimating a model of the nonlinear continuous-time short-term interest rate.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Econometric and statistical methods,
Interest rates
JEL Code(s):
C,
C1,
E,
E4
Forecasting Core Inflation in Canada: Should We Forecast the Aggregate or the Components?
Staff Working Paper 2005-44
Frédérick Demers,
Annie De Champlain
The authors investigate the behaviour of core inflation in Canada to analyze three key issues: (i) homogeneity in the response of various price indexes to demand or real exchange rate shocks relative to the response of aggregate core inflation; (ii) whether using disaggregate data helps to improve the forecast of core inflation; and (iii) whether using monthly data helps to improve quarterly forecasts.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Econometric and statistical methods,
Inflation and prices
JEL Code(s):
C,
C5,
E,
E3,
E37