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2334
result(s)
What Does Downward Nominal-Wage Rigidity Imply for Monetary Policy?
Staff Working Paper 1997-13
Seamus Hogan
A recent paper has suggested there might be a trade-off between inflation and unemployment at low inflation rates and this has led some economists to recommend that Canada increase its inflation rate.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation targets,
Monetary policy framework,
Monetary policy transmission
JEL Code(s):
C,
C5,
C52,
E,
E2,
E24,
E5,
E50
May 14, 1997
The changing business activities of banks in Canada
Over the last 30 years, the business mix of banks in Canada has changed significantly. Progress in information-processing technology, legislative changes, and market forces have combined to blur the traditional distinctions between banks and other financial institutions and have allowed banks to offer a much wider range of products and services. In this article, the author reviews the expansion of bank lending to households over this period and their recent movement into personal wealth management. While these trends were facilitated by revisions to legislation, they also reflected the changing needs of the "baby boom" generation, first as home-buyers and, more recently, as middle-aged investors. On the commercial and corporate side, banks reacted to the rapid expansion of securities markets (and to the reduced demand for intermediation by both lenders/depositors and borrowers) by moving into investment banking, after legislative changes opened this business to them in the late 1980s. They also used their expertise in credit assessment and risk management to provide credit guarantees and to act as counterparties and intermediaries in derivatives markets. Notable in this broadening of bank activities has been their more recent entry into the trust, mutual fund, and retail brokerage business. The banks have also made preliminary forays into insurance. The expansion of off-balance-sheet activities has made fee income an increasingly important part of bank earnings. The article also looks at the emerging tools and techniques that will most likely transform the structure of banking in the future.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Financial institutions
May 13, 1997
Capacity constraints, price adjustment, and monetary policy
The short-run Phillips curve describes a positive short-run relationship between the level of economic activity and inflation. When the level of demand in the economy as a whole runs ahead of the level of output that the economy can supply in the short run, price pressures increase and inflation rises. This article reviews the origins of the short-run Phillips curve with particular emphasis on the long-standing idea that the shape of this curve may be non-linear, with inflation becoming more sensitive to changes in output when the cycle of economic activity is high than when it is low. This type of non-linearity in the short-run Phillips curve, which is typically motivated by the effects of capacity constraints that limit the ability of the economy to expand in the short run, has recently attracted renewed attention. The article surveys recent research that finds some evidence of this type of non-linearity in the Phillips curve in Canada and considers the potential implications for monetary policy.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Inflation and prices,
Monetary policy transmission,
Potential output
A Micro Approach to the Issue of Hysteresis in Unemployment: Evidence from the 19881990 Labour Market Activity Survey
Staff Working Paper 1997-12
Gordon Wilkinson
This paper uses a rich set of microeconomic labour market data—the 198890 Labour Market Activity Survey published by Statistics Canada—to test whether there is negative duration dependence in unemployment spells. It updates and extends similar work carried out by Jones (1995) who used the 198687 Labour Market Activity Survey.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Labour markets
JEL Code(s):
E,
E2,
E24
A Band-Aid Solution to Inflation Targeting
Staff Working Paper 1997-11
Robert Amano,
Richard Black,
Marcel Kasumovich
This paper reviews selectively the literature on exchange rate target zones and corresponding methodologies and examines whether they can be used to analyse the inflation-control problem.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation targets
JEL Code(s):
E,
E3,
E31,
E5,
E50
The Structure of Interest Rates in Canada: Information Content about Medium-Term Inflation
This paper examines the relationship between the term structure of interest rates and future changes in inflation for Canada using a newly constructed par-value yield series. The main conclusion of the empirical work is that the slope of the nominal term structure from 1- to 5-year maturities is a reasonably good predictor of future changes in inflation over these horizons.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Interest rates,
Monetary and financial indicators
JEL Code(s):
E,
E4,
E43
Mesures du taux d'inflation tendanciel
Staff Working Paper 1997-9
Thérèse Laflèche
In this paper, the author calculates new measures of the trend inflation rate using changes in the components of total CPI; the hypothesis is that extreme fluctuations in certain prices reflect temporary supply shocks rather than any basic price trend.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation and prices
JEL Code(s):
E,
E3,
E31
Implementation of Monetary Policy in a Regime with Zero Reserve Requirements
Staff Working Paper 1997-8
Kevin Clinton
Monetary policy can be implemented effectively without reserve requirements as long as cost incentives ensure a predictable demand for settlement balances. A central bank can then achieve the level of short-term interest rates that it desires, using market-oriented instruments only.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Monetary policy implementation
JEL Code(s):
E,
E5,
E52
Monetary Shocks in the G-6 Countries: Is There a Puzzle?
Staff Working Paper 1997-7
Ben Fung,
Marcel Kasumovich
This paper attempts to reduce the uncertainty about the dynamics of the monetary transmission mechanism. Central to this attempt is the identification of monetary policy shocks. Recently, VAR approaches that use over-identifying restrictions have shown success in isolating such shocks.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Economic models,
International topics,
Monetary policy transmission
JEL Code(s):
E,
E5,
E52,
E58