Nominal Rigidities and Monetary Policy in Canada Since 1981
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Bibliographic InfoPaper provided by Bank of Canada in its series Working Papers with number 02-25.
Length: 54 pages Abstract: This paper develops and estimates a dynamic, stochastic, general-equilibrium model with price and wage stickiness to analyze monetary policy in Canada. A monetary policy rule allows the Bank of Canada to systematically influence the short-term nominal interest rate and money growth in response to inflation and output deviations. The structural parameters of the model are estimated econometrically using a maximum-likelihood procedure with a Kalman filter. The estimates reveal that either price or wage rigidities are key nominal frictions that generate real monetary effects. Furthermore, the simulation results show that the Bank has, since 1981, increased the short-term nominal interest rate in response to exogenous positive demand-side disturbances, and used modest but persistent reductions to accommodate positive technology shocks.
Date of creation: 2002
Date of revision:
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Web page: http://www.bank-banque-canada.ca/
Monetary policy framework;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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.:
- Jean-Philippe Cayen & Simon van Norden, 2002. "La fiabilité des estimations de l'écart de production au Canada," Working Papers 02-10, Bank of Canada.
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Computing in Economics and Finance 2005
314, Society for Computational Economics.
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"Bank Lending, Credit Shocks, and the Transmission of Canadian Monetary Policy,"
03-9, Bank of Canada.
- Atta-Mensah, Joseph & Dib, Ali, 2008. "Bank lending, credit shocks, and the transmission of Canadian monetary policy," International Review of Economics & Finance, Elsevier, vol. 17(1), pages 159-176.
- Juan José Echavarría Soto & Enrique López Enciso & Martha Misas Arango & Juana Téllez Corredor- Juan Carlos Parra Álvarez, 2007.
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ENSAYOS SOBRE POLÍTICA ECONÓMICA,
BANCO DE LA REPÚBLICA - ESPE.
- Juan José Echavarría Soto & Enrique López Enciso & Martha Misas Arango & Juana Téllez Corredor & Juan Carlos Parra Alvarez, . "La Tasa de Interés Natural en Colombia," Borradores de Economia 412, Banco de la Republica de Colombia.
- Juan José Echavarría & Enrique López Enciso & Martha Misas Arango & Juana Tellez Corredor, 2006. "La Tasa de Interés Natural en Colombia," BORRADORES DE ECONOMIA 003088, BANCO DE LA REPÚBLICA.
- Ali Dib, 2003.
"Monetary Policy in Estimated Models of Small Open and Closed Economies,"
03-27, Bank of Canada.
- Ali Dib, 2011. "Monetary Policy in Estimated Models of Small Open and Closed Economies," Open Economies Review, Springer, vol. 22(5), pages 769-796, November.
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