Arbeitspapier
Sequencing extended monetary policies at the effective lower bound
In response to the global COVID-19 pandemic, the Bank of Canada aggressively lowered its policy interest rate and provided additional easing using forward guidance and quantitative easing. In this analysis, we use simulations in the Bank of Canada's projection model-the Terms-of-Trade Economic Model-to consider a suite of extended monetary policies (EMPs) to support the economy following the COVID-19 crisis. We focus on the implementation sequencing of three EMP options when the policy rate is at the effective lower bound: credit easing, forward guidance and quantitative easing. We find that the policy mix that delivers the best outcome for the Canadian economy calls for immediately implementing forward guidance and quantitative easing, followed by credit easing when containment measures are lifted. Furthermore, going "full scale" and implementing all available EMP options effectively helps stabilizing the economy because each of these tools reinforces the others. We also quantify the fiscal response needed to offset the gap in gross domestic product created by the effective lower bound, given operational limitations in scaling up EMPs.
- Sprache
-
Englisch
- Erschienen in
-
Series: Bank of Canada Staff Discussion Paper ; No. 2021-10
- Klassifikation
-
Wirtschaft
Monetary Policy
Central Banks and Their Policies
- Thema
-
Coronavirus disease (COVID-19)
Monetary policy
Monetary policy transmission
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Zhang, Yang
Suchanek, Lena
Swarbrick, Jonathan M.
Wagner, Joel
Schlanger, Tudor
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Canada
- (wo)
-
Ottawa
- (wann)
-
2021
- DOI
-
doi:10.34989/sdp-2021-10
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Zhang, Yang
- Suchanek, Lena
- Swarbrick, Jonathan M.
- Wagner, Joel
- Schlanger, Tudor
- Bank of Canada
Entstanden
- 2021
Ähnliche Objekte (12)
Monetary policy lag, zero lower bound, and inflation targeting
Downward nominal wage rigidity meets the zero lower bound
Forward guidance at the effective lower bound: International experience
Fiscal and monetary stabilization policy at the zero lower bound: Consequences of limited foresight
Government spending multipliers under the zero lower bound: Evidence from Japan
Quantitative easing as a policy tool under the effective lower bound
Unconventional monetary policy and the Great Recession: Estimating the macroeconomic effects of a spread compression at the zero lower bound
Tractable term-structure models and the zero lower bound
Social learning and monetary policy at the effective lower bound
Risk premium shocks and the zero bound on nominal interest rates
Extracting information from the business outlook survey using statistical approaches
International business cycles and financial frictions
Monetary policy lag, zero lower bound, and inflation targeting
Downward nominal wage rigidity meets the zero lower bound
Forward guidance at the effective lower bound: International experience
Fiscal and monetary stabilization policy at the zero lower bound: Consequences of limited foresight
Government spending multipliers under the zero lower bound: Evidence from Japan
Quantitative easing as a policy tool under the effective lower bound
Unconventional monetary policy and the Great Recession: Estimating the macroeconomic effects of a spread compression at the zero lower bound
Tractable term-structure models and the zero lower bound
Social learning and monetary policy at the effective lower bound
Risk premium shocks and the zero bound on nominal interest rates
Extracting information from the business outlook survey using statistical approaches
International business cycles and financial frictions
Monetary policy lag, zero lower bound, and inflation targeting
Downward nominal wage rigidity meets the zero lower bound
Forward guidance at the effective lower bound: International experience
Fiscal and monetary stabilization policy at the zero lower bound: Consequences of limited foresight
Government spending multipliers under the zero lower bound: Evidence from Japan
Quantitative easing as a policy tool under the effective lower bound
Unconventional monetary policy and the Great Recession: Estimating the macroeconomic effects of a spread compression at the zero lower bound
Tractable term-structure models and the zero lower bound
Social learning and monetary policy at the effective lower bound
Risk premium shocks and the zero bound on nominal interest rates
Extracting information from the business outlook survey using statistical approaches