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370
result(s)
December 13, 1997
The overnight market in Canada
The overnight market is an active forum where participants with a temporary surplus or shortage of funds can lend or borrow until the next business day. The level of interest rates in the overnight market has always been closely linked to the Bank of Canada's monetary policy operations. In this article, the authors describe the evolution of the market from its roots in the 1950s, the development of the Bank's monetary policy operations in the market, and how the market operates today. They also examine the outlook for the overnight market, particularly the implications of the new Large-Value Transfer System.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Monetary policy implementation
December 11, 1997
Price stability, inflation targets, and monetary policy: Conference summary
This article summarizes the proceedings of a conference hosted by the Bank of Canada in May 1997. The first conference held by the Bank on this subject was in 1993, two years after the introduction of inflation targeting in Canada. The 1997 conference revisited many of the analytic issues related to price stability that had been examined at the first conference, while also considering several additional questions. This time, with the extension of inflation-control targets beyond 1998 under consideration, particular emphasis was placed on the role and design of those targets. The conference also featured a round-table discussion among practitioners of monetary policy in three inflation-targeting countries—New Zealand, Sweden, and the United Kingdom. Their remarks, which focussed on the experience with inflation targets, bring out very clearly the common challenges facing monetary policymakers in open economies.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Monetary policy framework
Constraints on the Conduct of Canadian Monetary Policy in the 1990s: Dealing with Uncertainty in Financial Markets
Technical Report No. 80
Kevin Clinton,
Mark Zelmer
Canada's economic performance in the first half of the 1990s was adversely affected by high premiums in interest rates that were brought on by political and economic uncertainties.
Content Type(s):
Staff research,
Technical reports
Topic(s):
Monetary policy and uncertainty,
Monetary policy implementation,
Monetary policy transmission
JEL Code(s):
E,
E5,
E58
Menu Costs, Relative Prices, and Inflation: Evidence for Canada
Staff Working Paper 1997-14
Robert Amano,
Tiff Macklem
The menu-cost models of price adjustment developed by Ball and Mankiw (1994;1995) predict that short-run movements in inflation should be positively related to the skewness and the variance of the distribution of disaggregated relative-price shocks in each period. We test these predictions on Canadian data using the distribution of changes in disaggregated producer prices to measure the skewness and standard deviation of relative-price shocks.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation and prices,
Monetary policy framework
JEL Code(s):
C,
C5,
C52,
E,
E3,
E31
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 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
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
December 11, 1996
The impact of exchange rate movements on consumer prices
In the first, mostly theoretical, part of this article, the author analyses the factors that affect the pass-through of exchange rate movements to consumer prices. In the second part, she studies the recent Canadian experience in this area, starting from 1992. The analysis in the first part of the article is used to investigate why the depreciation of the Canadian dollar by almost 20 per cent between 1992 and 1994 did not produce as much of an increase in the inflation rate as predicted by conventional estimates of the exchange rate pass-through. The author first explains this phenomenon using the factors described in the theoretical part of the article: demand conditions, the costs of adjusting prices, and expectations about the depreciation's duration. She then examines the role of more specific factors, such as the abolition of customs duties on trade between Canada and the United States and the restructuring of the retail market. It is clear that the latter two factors helped neutralize the effect of the depreciation on prices.
Content Type(s):
Publications,
Bank of Canada Review articles
Topic(s):
Exchange rates,
Inflation and prices,
Monetary policy transmission