{
  "title": "Unconventional Monetary Policy in a Small Open Economy",
  "publication": "IMF Working Papers, December 1, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/12/01/unconventional-monetary-policy-in-a-small-open-economy-45437",
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  "summary": "This paper investigates the effects of unconventional monetary policy in a small open economy. Using recently proposed shadow interest rates to capture unconventional monetary policy at the zero lower bound (ZLB) we estimate a Bayesian structural vector autoregressive model for Canada - a useful cas",
  "sections": [
    {
      "heading": "Objective and methodology",
      "content": "- Investigates the effects of unconventional monetary policy in a small open economy.\n- Uses recently proposed shadow interest rates to capture unconventional monetary policy at the zero lower bound (ZLB).\n- Estimates a Bayesian structural vector autoregressive model for Canada, treating foreign shocks as proxied by U.S. variables alone."
    },
    {
      "heading": "Key findings",
      "content": "- During the ZLB period, Canadian unconventional monetary policy increased output (measured by industrial production) by 0.013 percent per month on average.\n- During the ZLB period, US unconventional monetary policy raised Canadian output by 0.127 percent per month on average.\n- Results demonstrate:\n  - The effectiveness of domestic unconventional monetary policy in a small open economy.\n  - Strong positive spillover effects from foreign unconventional monetary policies."
    },
    {
      "heading": "Interpretation and implications",
      "content": "- Domestic shadow-rate based unconventional policy can produce measurable monthly increases in industrial production even at the ZLB.\n- Foreign (U.S.) unconventional policies can have substantially larger positive spillovers on the small open economy examined (Canada) than domestic unconventional actions, per the estimated monthly effects.\n- For small open economies, international transmission of unconventional monetary policy is an important channel to consider alongside domestic policy effectiveness.\n\n---\n\n Content in this bundle\n\n- Unconventional Monetary Policy in a Small Open Economy, WP/17/268, December 2017\n  - Unconventional Monetary Policy in a Small Open Economy, WP/17/268, December 2017 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Unconventional Monetary Policy in a Small Open Economy, WP/17/268, December 2017 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/12/01/unconventional-monetary-policy-in-a-small-open-economy-45437"
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    "Authors: Margaux MacDonald, Michał Ksawery Popiel",
    "Published: December 1, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484330944.001",
    "Investigates the effects of unconventional monetary policy in a small open economy.",
    "Uses recently proposed shadow interest rates to capture unconventional monetary policy at the zero lower bound (ZLB).",
    "Estimates a Bayesian structural vector autoregressive model for Canada, treating foreign shocks as proxied by U.S. variables alone.",
    "During the ZLB period, Canadian unconventional monetary policy increased output (measured by industrial production) by 0.013 percent per month on average.",
    "During the ZLB period, US unconventional monetary policy raised Canadian output by 0.127 percent per month on average.",
    "Results demonstrate:",
    "Domestic shadow-rate based unconventional policy can produce measurable monthly increases in industrial production even at the ZLB.",
    "Foreign (U.S.) unconventional policies can have substantially larger positive spillovers on the small open economy examined (Canada) than domestic unconventional actions, per the estimated monthly effects.",
    "For small open economies, international transmission of unconventional monetary policy is an important channel to consider alongside domestic policy effectiveness.",
    "**Unconventional Monetary Policy in a Small Open Economy, WP/17/268, December 2017**"
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