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201 Results

Firm Inattention and the Efficacy of Monetary Policy: A Text-Based Approach

Staff Working Paper 2022-3 Wenting Song, Samuel Stern
How much attention do firms pay to macroeconomic news? Through a novel text-based measure, two facts emerge. First, attention is polarized. Most firms either never or always pay attention to economic conditions. Second, it is countercyclical. During recessions, more firms pay attention, and firms pay greater attention to macroeconomic news.

Central Bank Digital Currency and Banking: Macroeconomic Benefits of a Cash-Like Design

Staff Working Paper 2021-63 Jonathan Chiu, Mohammad Davoodalhosseini
Should a CBDC be more like cash or bank deposits? An interest-bearing, cash-like CBDC not only makes payments more efficient but also increases total demand. This has positive effects on other transactions, inducing more deposit taking and lending and, thus, bank intermediation.

Revisiting the Monetary Sovereignty Rationale for CBDCs

Staff Discussion Paper 2021-17 Skylar Brooks
One argument for central bank digital currencies (CBDCs) is that without them, private and foreign digital monies could displace domestic currencies, threatening the central bank’s monetary policy and lender of last resort capabilities. I revisit this monetary sovereignty rationale and offer a wider view—one that considers a broader set of currency functions and captures important cross-country variation.
December 15, 2021

Building on success

Speech summary Tiff Macklem Empire Club of Canada Toronto, Ontario
Governor Tiff Macklem speaks about the Bank of Canada’s monetary policy framework review and the agreement between the Government of Canada and the Bank to renew the 2 percent inflation target.
December 15, 2021

Our monetary policy framework: Continuity, clarity and commitment

Remarks (delivered virtually) Tiff Macklem Empire Club of Canada Toronto, Ontario
Governor Tiff Macklem discusses the Bank of Canada’s renewed monetary policy framework. He reviews Canada’s experience with flexible inflation targeting and explains why the Bank and the Government of Canada agreed to renew the 2 percent inflation target.

Discount Rates, Debt Maturity, and the Fiscal Theory

Staff Working Paper 2021-58 Alexandre Corhay, Thilo Kind, Howard Kung, Gonzalo Morales
Do bond risk premiums influence the effects of debt maturity operations? Using a model with realistic bond risk premiums, we show that maturity operations have sizable effects on expected inflation and output when the central bank passively responds to inflation and the fiscal authority weakly responds to the debt level.
Content Type(s): Staff research, Staff working papers Topic(s): Fiscal policy, Interest rates, Monetary policy JEL Code(s): E, E4, E43, E44, E6, E63, G, G1, G12

Optimal Monetary Policy According to HANK

Staff Working Paper 2021-55 Sushant Acharya, Edouard Challe, Keshav Dogra
We study optimal monetary policy in an analytically tractable Heterogeneous Agent New Keynesian model. In the model, the central bank has an incentive to reduce consumption inequality in addition to keeping economic activity at its efficient level and inflation stable.
Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Monetary policy JEL Code(s): E, E2, E21, E3, E30, E5, E52, E6, E62, E63

Fiscal and Monetary Stabilization Policy at the Zero Lower Bound: Consequences of Limited Foresight

Staff Working Paper 2021-51 Michael Woodford, Yinxi Xie
How do outcomes of monetary and fiscal stabilization policies at the zero lower bound change when decision makers have finite planning horizons in the economy? We explore the effects of limited foresight on policy tools and the interaction between monetary and fiscal policy.

The impact of the Bank of Canada’s Government Bond Purchase Program

We assess the response of Government of Canada bond yields to the Bank of Canada’s initial announcement of the Government Bond Purchase Program (GBPP) as well as to the Bank’s later GBPP purchase operations.
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