The Chair in Monetary Policy and Financial Markets aims at providing policymakers with formal frameworks for economic analysis by:

  1. Building general equilibrium models and using analytical and computational methods to devise optimal policies;
  2. Developing econometric analysis of panel and cross-sectional data to understand the impact of the business cycle and of global shocks on the optimal decisions across households, firms and financial intermediaries.

To this end, the Chair draws on the wide expertise of HEC Montréal economists in the fields of labour economics, finance and industrial organization to analyze cross-sectional data.

From the time of the first oil shock to the 1990s, the debate on the goals and instruments of monetary policy has been dominated by the challenge of taming inflation and anchoring inflation expectations. The Bank of Canada has been at the forefront of this debate, being one of the first monetary authorities to introduce an inflation targeting framework.

Starting in 2008, the Euro-area sovereign debt crisis, the US financial crisis, the prolonged global recession and the large fluctuations in the prices of natural resources ushered in a new and much more influential role for monetary policy institutions and supranational institutions like the IMF. The challenges for policymakers and economic research have radically shifted.

The Chair in Monetary Policy and Financial markets participates in debates about monetary policy by helping policymakers deal with questions such as:

  • Can we devise new monetary policy instruments to address and control the dangers occurring when actors across different financial markets become overexposed to the same risk?
  • What role should unemployment, the sluggish recovery of employment, and the rapidly changing composition of labour market flows have in devising optimal fiscal and monetary policies?
  • Does inequality have a role in optimal policymaking?
  • Are Canada and the global economy exposed to the risk that greater uncertainty regarding the price of natural resources may lead to a sudden fall in investments and hiring?