Estimating Canada’s Effective Lower Bound Staff Analytical Note 2015-2 Jonathan Witmer, Jing Yang In 2009, the Bank of Canada set its effective lower bound (ELB) at 25 basis points (bps). Given the recent experience of Sweden, Denmark, Switzerland and the euro area with negative interest rates, we examine the economics of negative interest rates and suggest that cash storage costs are the source of a negative lower bound on interest rates. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Central bank research, Monetary policy framework, Monetary policy implementation JEL Code(s): D, D5, D53, E, E4, E41, E43, E5, E58
Foreign Flows and Their Effects on Government of Canada Yields Staff Analytical Note 2015-1 Bruno Feunou, Jean-Sébastien Fontaine, James Kyeong, Jesus Sierra Foreign investment flows into Government of Canada (GoC) bonds have surged since the financial crisis. Our empirical analysis suggests that foreign flows of $150 billion lowered the 10-year GoC bond yield by 100 basis points between 2009 and 2012. Content Type(s): Staff research, Staff analytical notes Research Topic(s): International financial markets, International topics, Monetary policy transmission JEL Code(s): F, F3, F32