In their new book “Navigating Turbulence: Canadian Monetary Policy Since 2004,” authors Steve Ambler and Jeremy Kronick assess the Bank of Canada’s policies from 2004, through the turbulence of the 2008-09 recession, the recovery and up to the current period. Overall, they give the Bank high marks for its stewardship. However, the Bank faces key new challenges posed by the current low-interest-rate, low-inflation environment that require response, according to the authors.
The book is available at the Renouf Online Bookstore at https://www.renoufbooks.com/bookstore/bookstore.aspx?c=bookstore&m=bd&l=nl&i=123954 .
The first, “Do demographics affect monetary policy transmission in Canada?”, International Journal of Finance and Economics, is joint with Jeremy Kronick of the C.D. Howe Institute. The authors use panel data from Canada and its ten provinces to estimate the dynamic impact of monetary policy shocks since the 1980s. They show that population aging has significantly reduced the impact of those shocks. This can help explain the systematic undershooting of Canadian inflation compared to the Bank of Canada’s target since the financial crisis, and in the long run could undermine the effectiveness of Canada’s monetary policy. The article is available at https://www.onlinelibrary.wiley.com/doi/10.1002/ijfe.1691 .
The second article, “The effectiveness of unconventional monetary policy announcements in the euro area: An event and econometric study”, Journal of International Money and Finance, is joint with Fabio Rumler of the Austrian central bank (the Oesterreichische Nationalbank). The authors use daily data on government bond yields and market-based inflatin expectations to analyse the impact of the European Central Bank’s monetary policy announcements. They find highly significant effects on both nominal and real interest rates in the euro zone. The article is available at https://doi.org/10.1016/j.jimonfin.2019.02.007 .