NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Charles Freedman

Adviser
Bank of Canada
234 Wellington Street
Ottawa, Ont K1A 0G9 CANADA

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NBER Working Papers and Publications

September 1981Monetary Aggregates as Targets: Some Theoretical Aspects
w0775
In the mid-1970s the Bank of Canada, along with a number of other central banks, began to set explicit targets for monetary growth and to emphasize the long-run role of monetary aggregates in controlling the rapid upward trend of prices. There are three distinct ways of viewing and interpreting a policy of setting growth targets for monetary aggregates. The first is associated with the work of William Poole, the second is derived from the reduced-form model initially developed at the Federal Reserve Bank of St. Louis, and the third, which the author has labeled the feedback- rule approach, is related to the techniques developed within central banks to implement the policy of monetary targeting. In this paper the author sets forth the logic and examines the implications of these three metho...

Published: Freedman, Charles. "Monetary Aggregates as Targets: Some Theorectical Aspects." Bank of Canada Technical Report 27, (1981).

March 1981Some Theoretical Aspects of Base Control
w0650
This paper focuses on the implications of using the monetary base or bank reserves as an instrument to control a monetary aggregate. Following analysis of a series of theoretical models of increasing complexity, it is concluded that in a system with either institutional or structural lags base control may entail very sharp and possibly undamped oscillations of short-term interest rates. The shorter the time period over which the authorities choose to bring the monetary aggregate back to its target, the more volatile will be the movements of interest rates. Furthermore, there is an asymmetry in the U.S. institutional structure such that rigid implementation of the base control system will under certain circumstances lead to a decline in short-term interest rates to very low levels. The fina...

Published: Freedman, Charles. "Some Theoretical Aspects of Base Control." The Canadian Balance of Payments: Perspectives and Policy Issues, edited by Douglas Purvis. Institute for Research on Public Policy Montreal Canada, (1983).

August 1980Some Aspects of the Canadian Experience with Flexible Exchange Rates in the 1970s
with David Longworth: w0535
In this study, the authors examine three aspects of the Canadian experience with flexible exchange rates in the 1970s: the movements in the Canadian dollar-U.S. dollar exchange rate, the sharp growth of external borrowings by Canadians in the 1974-76 period, and the real effects of relative price movements. Several theoretical and empirical exchange rate models are found to have done poorly in explaining the movements of the value of the Canadian dollar over the decade. In the examination of external borrowings in the mid-1970s, it is concluded that there was some response in borrower and lender behaviour to movements in nominal long-term interest rate differentials. Four sources of explanation for such behaviour are examined. A three-sector model comprising non-tradable goods, resource-ba...

Published: Freedman, Charles and David Longworth. "Some Aspects of the Canadian Experience with Flexible Exchange Rates in the 1970s." Bank of Canada Technical Report 20, (1980).

August 1979The Canadian Dollar, 1971-76: An Exploratory Investigation of Short Run Movements
w0380
This paper examines the movement of the Canadian dollar over the 1971-76 period. Although Canadian prices increased substantially more than U.S. prices over this period, there was no tendency for a systematic depreciation of the Canadian dollar. To explain this phenomenon requires the introduction of other factors into the exchange rate equation. Among the variables that proved significant are the Canadian terms of trade, measures of long-term borrowing, the relative cyclical position of Canada and the United States, and the market's errors in forecasting the current account balance. When used together with relative prices, these variables track the movement of the Canadian dollar very satisfactorily over the period.
 
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