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Reciprocal Influences


  • Marc Lavoie
  • Mario Seccareccia


The history of the Bank of Canada and the U.S. Federal Reserve System is intertwined not only because of geographical proximity but because of the reciprocal influence on the way they have evolved their structures to conduct monetary policy. While both find their origins in financial crises, the environment in which they were embedded in the early twentieth century was quite different. Before central banking, the U.S. banking structure was decentralized and susceptible to recurrent breakdowns, thereby necessitating a lender of last resort, while the Canadian banking system was oligopolistic and highly centralized from its inception. For most of the postwar period, the Bank of Canada tended to follow policies that generally originated south of the Canadian border; but over the past quarter-century, the Bank of Canada has been at the forefront of policy innovations, particularly in seeking to restructure its policy system along Wicksellian lines. A detailed account of these institutional changes is provided, including the recent changes that have taken place in the aftermath of the financial crisis.

Suggested Citation

  • Marc Lavoie & Mario Seccareccia, 2013. "Reciprocal Influences," International Journal of Political Economy, Taylor & Francis Journals, vol. 42(3), pages 63-83.
  • Handle: RePEc:mes:ijpoec:v:42:y:2013:i:3:p:63-83 DOI: 10.2753/IJP0891-1916420304

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    References listed on IDEAS

    1. Dimitri Papadimitriou & L. Randall Wray, 1998. "The Economic Contributions of Hyman Minsky: varieties of capitalism and institutional reform," Review of Political Economy, Taylor & Francis Journals, vol. 10(2), pages 199-225.
    2. Yeva Nersisyan & L. Randall Wray, 2010. "The Trouble with Pensions: Toward an Alternative Public Policy to Support Retirement," Economics Public Policy Brief Archive ppb_109, Levy Economics Institute.
    3. Jan Kregel, 2010. "No Going Back: Why We Cannot Restore Glass-Steagall's Segregation of Banking and Finance," Economics Public Policy Brief Archive ppb_107, Levy Economics Institute.
    4. Marshall Auerback & L. Randall Wray, 2010. "Toward True Health Care Reform: More Care, Less Insurance," Economics Public Policy Brief Archive ppb_110, Levy Economics Institute.
    5. Eric Tymoigne & L. Randall Wray, 2009. "It Isn't Working: Time for More Radical Policies," Economics Public Policy Brief Archive ppb_105, Levy Economics Institute.
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