The goal of this paper is to assess the effectiveness of the policy measures taken by Canadian authorities to address the housing boom. We find that the the last three rounds of macroprudential policies implemented since 2010 were associated with lower mortgage credit growth and house price growth. The international experience suggests that-in addition to tighter loan-to-value limits and shorter amortization periods-lower caps on the debt-to-income ratio and higher risk weights could be effective if the housing boom were to reignite. Over the medium term, the authorities could consider structural measures to further improve the soundness of housing finance.
This paper uses vector autoregressions to examine the monetary transmission mechanism inT he mechanism for the transmission of monetary policy changes to real activity-the famous "black box"-is always a subject of lively interest to economists. Many channels have been identified, including interest rates, the exchange rate, inflationary expectations (higher expected inflation lowers the real interest rate), bank lending, balance sheet effects, and wealth effects, but there is little agreement on either their precise workings or their relative importance (see Mishkin, 1995).When an economy is in a recession, such as Japan is experiencing currently, monetary policy and the channels of monetary transmission receive particular scrutiny. In the case of Japan, two further factors make understanding the trans-
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