Bank of Canada maps path to ‘fourth-generation’ models
Officials plan to create new workhorse model backed by variants focusing on key topics
Research by the Bank of Canada has started to map out how it will move to a ‘fourth generation’ of monetary policy models.
The Bank of Canada has two main policy models: a dynamic stochastic general equilibrium model called Totem; and a semi-structural model known as Lens. Totem entered service in 2005 and Lens in 2014, but the BoC now thinks economic research has advanced far enough to consider a fresh update.
Don Coletti, adviser to the BoC’s governor, outlines its strategic plan for its
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