Our understanding of the links between the financial sector and the rest of the economy needs to improve concludes this report. The authors say that the complexity of these linkages have been neglected in the models typically used to guide monetary policy - the question is how to remedy...

The Bank of Canada should pay closer attention to the effects of money and credit growth on inflation and asset markets. The authors contend that maintaining price stability should remain the Bank's only formal goal, but say greater attention should be paid to asset market stability. Once the...