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Putting Money Back into Monetary Policy: A Monetary Anchor for Price and Financial Stability

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Author Info

  • Philippe Bergevin

    (C.D. Howe Institute)

  • David Laidler

    (C.D. Howe Institute)

Abstract

The Bank of Canada should pay closer attention to the effects of money and credit growth on inflation and asset markets. The authors contend that maintaining price stability should remain the Bank’s only formal goal, but say greater attention should be paid to asset market stability. Once the role of asset markets in the mechanics of inflation or price-level targeting is made explicit, such a policy will promote orderly asset market behaviour. This hinges on the role broader money and credit aggregates play in the transmission mechanism that links monetary policy to the behaviour of the rest of the economy.

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File URL: http://www.cdhowe.org/pdf/Commentary_312.pdf
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Bibliographic Info

Article provided by C.D. Howe Institute in its journal C.D. Howe Institute Commentary.

Volume (Year): (2010)
Issue (Month): 312 (October)
Pages:

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Handle: RePEc:cdh:commen:312

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Related research

Keywords: Monetary Policy; Bank of Canada; inflation; price stability; asset market stability; price-level targeting; broad money aggregate (M2+);

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References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Pierre L. Siklos, 2009. "As Good As It Gets? The International Dimension to Canada's Monetary Policy Strategy Choices," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 292, July.
  2. Michael Hart, 2010. "A Matter of Trust: Expanding the Preclearance of Commerce between Canada and the United States," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 309, September.
  3. John Richards, 2010. "Reducing Lone-Parent Poverty: A Canadian Success Story," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 305, June.
  4. Barnett, William A., 1980. "Economic monetary aggregates an application of index number and aggregation theory," Journal of Econometrics, Elsevier, vol. 14(1), pages 11-48, September.
  5. Daniel Boothby & Torben Drewes, 2010. "The Payoff: Returns to University, College and Trades Education in Canada, 1980 to 2005," e-briefs 104, C.D. Howe Institute.
  6. Jan Carr, 2010. "Power Sharing: Developing Inter-Provincial Electricity Trade," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 306, July.
  7. Lawrence L. Herman, 2010. "Trend Spotting: NAFTA Disputes After Fifteen Years," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 133, July.
  8. Dave Sawyer & Carolyn Fischer, 2010. "Better Together? The Implications of Linking Canada-US Greenhouse Gas Policies," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 307, August.
  9. Angelo Melino & Michael Parkin, 2010. "Greater Transparency Needed," e-briefs 102, C.D. Howe Institute.
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Citations

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Cited by:
  1. David Laidler, 2011. "Natural Hazards: Some Pitfalls on the Path to a Neutral Interest Rate," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 140, July.
  2. Steve E. Hrudey, 2011. "Safe Drinking Water Policy for Canada - Turning Hindsight into Foresight," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 323, February.
  3. David C. Allan & Philippe Bergevin, 2010. "The Canadian ABS Market: Where Do We Go From Here?," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 315, November.
  4. David Longworth, 2010. "Warding Off Financial Market Failure: How to Avoid Squeezed Margins and Bad Haircuts," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 135, December.
  5. David Laidler, 2012. "Money Still Talks - Is Anyone Listening?," e-briefs 133, C.D. Howe Institute.
  6. Philippe Bergevin & William B.P. Robson, 2011. "The Costs of Inflexible Indexing: Avoiding the Adverse Fiscal Impacts of Lower Inflation," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 322, February.
  7. Angelo Melino, 2011. "Moving Monetary Policy Forward: Why Small Steps - and a Lower Inflation Target - Make Sense for the Bank of Canada," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 319, January.
  8. Alexandre Laurin & William B.P. Robson, 2011. "A Faster Track to Fiscal Balance: The 2011 Shadow Budget," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 320, February.
  9. Finn Poschmann, 2011. "What Governments Should Do in Mortgage Markets," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 318, January.
  10. Andrew Green & Michael Trebilcock, 2010. "The Eco-Fee Imbroglio: Lessons from Ontario’s Troubled Experiment in Charging for Waste Management," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 316, December.
  11. Christopher Ragan, 2011. "Precision Targeting: The Economics – and Politics – of Improving Canada’s Inflation-Targeting Framework," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 321, February.
  12. Stuart Landon & Constance Smith, 2010. "Energy Prices and Alberta Government Revenue Volatility," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 313, November.
  13. Bev Dahlby & Ergete Ferede, 2011. "What Does it Cost Society to Raise a Dollar of Tax Revenue? The Marginal Cost of Public Funds," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 324, March.
  14. James P. Bruce, 2011. "Protecting Groundwater: The Invisible and Vital Resource," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 136, February.
  15. Kevin D. Moore & William Robson & Alexandre Laurin, 2010. "Canada’s Looming Retirement Challenge: Will Future Retirees Be Able to Maintain Their Living Standards upon Retirement?," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 317, December.
  16. Christopher Ragan, 2012. "Financial Stability: The Next Frontier for Canadian Monetary Policy," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 338, January.

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