E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
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Understanding Monetary Policy and its Effects: Evidence from Canadian Firms Using the Business Outlook Survey
This paper shows (i) that business sentiment, as captured by survey data, matters for monetary policy decisions in Canada, and (ii) how business perspectives are affected by monetary policy shocks. Measures of business sentiment (soft data) are shown to have systematic explanatory power for monetary policy decisions over and above typical Taylor rule variables. -
What Explains Month-End Funding Pressure in Canada?
The Canadian overnight repo market persistently shows signs of latent funding pressure around month-end periods. Both the overnight repo rate and Bank of Canada liquidity provision tend to rise in these windows. This paper proposes three non-mutually exclusive hypotheses to explain this phenomenon. -
Should Central Banks Worry About Nonlinearities of their Large-Scale Macroeconomic Models?
How wrong could policymakers be when using linearized solutions to their macroeconomic models instead of nonlinear global solutions?