Monetary policy

• February 7, 2023

  Higher interest rates are working

  Speech summary Tiff Macklem CFA Québec Québec, Québec

  Governor Tiff Macklem explains how the Bank of Canada’s increases to the policy interest rate will cool the economy and bring inflation down.

  Content Type(s): Press, Speeches and appearances, Speech summaries Research Topic(s): Domestic demand and components, Exchange rates, Inflation and prices, Interest rates, Monetary policy, Monetary policy transmission, Recent economic and financial developments

• (Un)Conventional Monetary and Fiscal Policy

  Staff Working Paper 2023-6 Jing Cynthia Wu, Yinxi Xie

  We build a tractable New Keynesian model to study and compare four types of monetary and fiscal policy: policy rate adjustments, quantitative easing, lump-sum fiscal transfers and government spending. We find that tax-financed fiscal policy is more stimulative than debt-financed policy, and optimal policy coordination needs at least two of these four policy instruments.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Fiscal policy, Monetary policy JEL Code(s): E, E4, E6, E61, E62, E63

• The 2021–22 Surge in Inflation

  Staff Discussion Paper 2023-3 Oleksiy Kryvtsov, James (Jim) C. MacGee, Luis Uzeda

  The rise in inflation in 2021–22 sparked a growing literature and debate over the causes of the surge as well as the near- and medium-term path for inflation. This review offers three key messages.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Inflation and prices, Inflation targets, Monetary policy JEL Code(s): E, E3, E31, E5, E52, E58

• Gazing at r-star: A Hysteresis Perspective

  Staff Working Paper 2023-5 Paul Beaudry, Katya Kartashova, Césaire Meh

  Many explanations for the decline in real interest rates over the last 30 years point to the role that population aging or rising income inequality plays in increasing the long-run aggregate demand for assets. Notwithstanding the importance of such factors, the starting point of this paper is to show that the major change driving household asset demand over this period is instead an increased desire—for a given age and income level—to hold assets.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Fiscal policy, Inflation and prices, Inflation targets, Interest rates, Monetary policy, Monetary policy framework JEL Code(s): E, E2, E21, E3, E31, E4, E43, E5, E52, E58, E6, E62, G, G5, G51, H, H6

• Understanding Post-COVID Inflation Dynamics

  Staff Working Paper 2022-50 Martin Harding, Jesper Lindé, Mathias Trabandt

  We propose a macroeconomic model with a nonlinear Phillips curve that has a flat slope when inflationary pressures are subdued and steepens when inflationary pressures are elevated. Our model can generate more sizable inflation surges due to cost-push and demand shocks than a standard linearized model when inflation is high.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Central bank research, Coronavirus disease (COVID-19), Economic models, Inflation and prices, Inflation: costs and benefits, Monetary policy, Monetary policy implementation JEL Code(s): E, E3, E30, E31, E32, E37, E4, E44, E5, E52
• December 12, 2022

  Putting the resolute in resolutions: Looking ahead to lower inflation

  Remarks Tiff Macklem Business Council of British Columbia Vancouver, British Columbia

  Bank of Canada Governor Tiff Macklem discusses the important lessons from 2022 and explains what the Bank is doing to restore price stability for Canadians.

  Content Type(s): Press, Speeches and appearances, Remarks Research Topic(s): Coronavirus disease (COVID-19), Inflation and prices, Interest rates, International topics, Monetary policy, Recent economic and financial developments
• December 12, 2022

  Reflections on 2022

  Speech summary Tiff Macklem Business Council of British Columbia Vancouver, British Columbia

  Governor Tiff Macklem discusses the important lessons from events in 2022 and what the Bank is doing to restore price stability for Canadians.

  Content Type(s): Press, Speeches and appearances, Speech summaries Research Topic(s): Coronavirus disease (COVID-19), Inflation and prices, Interest rates, International topics, Monetary policy, Recent economic and financial developments

• Monetary Policy, Credit Constraints and SME Employment

  Staff Working Paper 2022-49 Julien Champagne, Émilien Gouin-Bonenfant

  We revisit an old question: how do financial constraints affect the transmission of monetary policy to the real economy? To answer this question, we propose a simple empirical strategy that combines firm-level employment and balance sheet data, identified monetary policy shocks and survey data on financing activities.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Credit and credit aggregates, Econometric and statistical methods, Firm dynamics, Labour markets, Monetary policy JEL Code(s): E, E2, E3, E4, E43, E5, E52, G, G3
• November 10, 2022

  Getting back to stable prices and a balanced jobs market

  Speech summary Tiff Macklem Public Policy Forum Toronto, Ontario

  Governor Tiff Macklem discusses the relationship between inflation and employment and how the Bank of Canada is working to cool an overheated economy.

  Content Type(s): Press, Speeches and appearances, Speech summaries Research Topic(s): Central bank research, Coronavirus disease (COVID-19), Domestic demand and components, Expectations, Inflation and prices, Interest rates, Labour markets, Monetary policy, Monetary policy framework, Potential output, Price stability, Productivity, Recent economic and financial developments
• November 10, 2022

  Restoring labour market balance and price stability

  Remarks Tiff Macklem Public Policy Forum Toronto, Ontario

  Governor Tiff Macklem outlines the link between high inflation and tight labour markets. He explains how the Bank is working to rebalance the labour market and discusses how structural changes may influence the supply of workers in Canada.

  Content Type(s): Press, Speeches and appearances, Remarks Research Topic(s): Central bank research, Coronavirus disease (COVID-19), Domestic demand and components, Expectations, Inflation and prices, Interest rates, Labour markets, Monetary policy, Monetary policy framework, Potential output, Price stability, Productivity, Recent economic and financial developments