Cover IMF Working Papers
Disintermediation and Monetary Transmission in Canada
Author:
Mr. Jorge Roldos
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Series:
IMF Working Papers
Volume/Issue:
Volume 2006: Issue 084
Language:
English
Publication Date:
01 Mar 2006
DOI:
https://doi.org/10.5089/9781451863444.001
ISBN:
9781451863444
ISSN:
1018-5941
Pages:
35
Keywords:
WP; monetary policy; exchange rate
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper studies changes in Canada's monetary policy transmission, associated with the important changes in financial structure experienced in the 1990's, using two methodologies. First, VAR models show a clear break in monetary transmission beginning in 1988, after changes in financial regulation initiated the process of financial disintermediation. Second, estimates of the interest rate elasticity of aggregate demand in IS equations increase in the 1990's, suggesting that the systematic component of monetary policy has become more relevant. The ratio of direct to indirect finance, a measure of disintermediation, contributes to explain changes in the interest rate elasticity, suggesting an increased effectiveness of monetary policy associated with a larger use of market-based sources of finance.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2006: Issue 084