00000nam 2200000za 4500 9.822632 CaOODSP 20221107143724 cr ||||||||||| 160815s2016 oncd ob f000 0 eng d CaOODSP eng eng fre n-cn--- FB3-5/2016-38E-PDF The global financial cycle, monetary policies and macroprudential regulations in small, open economies [electronic resource] / by Gregory Bauer ... [et al.]. [Ottawa] : Bank of Canada, c2016. ii, 31 p. : graphs. Staff Working Paper, 1701-9397 ; 2016-38 August 2016. Includes bibliographical references. This paper analyzes the implications of the global financial cycle for conventional and unconventional monetary policies and macroprudential policy in small, open economies such as Canada. The paper starts by summarizing recent work on financial cycles and their growing correlation across borders. The resulting global financial cycle may be followed by a financial crisis that is quite costly. The cycle causes time variation in global risk premia in fixed income, equity and foreign exchange markets. In turn, time-varying global risk premia affect the transmission mechanisms of both conventional and unconventional monetary policies in small, open economies. While there are large costs associated with financial crises, the paper summarizes new work showing that the central banks’ leaning against the effects of the global financial cycle would typically be too costly. The paper concludes with some suggestions for the formation of macroprudential policies that are designed to offset the financial imbalances that grow during the boom phase of the cycle. gccst Monetary policy gccst International markets gccst Economic analysis Bank of Canada. Staff working paper (Bank of Canada) 1701-9397 ; 2016-38 (CaOODSP)9.806221 PDF 586 KB https://publications.gc.ca/collections/collection_2016/banque-bank-canada/FB3-5-2016-38-eng.pdf