Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93494
Authors: 
Siklos, Pierre L.
Neuenkirch, Matthias
Year of Publication: 
2013
Series/Report no.: 
Joint Discussion Paper Series in Economics 41-2013
Abstract: 
This paper examines the policy rate recommendations of the Bank of Canada's Governing Council (GC) and the C.D. Howe Institute's Monetary Policy Council (MPC) since 2003. We find, first, that differences in the median recommendations between the MPC and the GC are persistent but small (i.e., 25 bps). The median MPC recommendation is based on a higher steady state real interest rate. However, the response of the MPC and the GC to output and inflation shocks are, for the most part, comparable. Second, we are also able to examine the individual recommendations for the MPC. Estimates of the determinants of consensus inside the MPC or disagreement with the GC yield some useful insights. For example, disagreements are more likely when rates are proposed to rise than at other times. Equally interesting is the finding that the Bank of Canada conditional commitment on the overnight rate in 2009-10 has a relatively larger restricting impact on the MPC's median recommendation than the GC's target rate.
Subjects: 
Bank of Canada
central bank communication
committee behaviour
monetary policy committees
shadow councils
Taylor rules
JEL: 
E43
E52
E58
E61
E69
Document Type: 
Working Paper

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