E - Macroeconomics and Monetary Economics

• Market Structure and Cost Pass-Through in Retail

  Staff Working Paper 2013-5 Gee Hee Hong, Nicholas Li

  We examine the extent to which vertical and horizontal market structure can together explain incomplete retail pass-through.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Monetary policy transmission JEL Code(s): E, E3, E30, E31, L, L1, L11, L16
• February 21, 2013

  The G-20 Framework for Strong, Sustainable and Balanced Growth: Macroeconomic Coordination Since the Crisis

  Bank of Canada Review - Winter 2012-2013 Robert Lavigne, Subrata Sarker

  Since 2009, the G-20 Framework for Strong, Sustainable and Balanced Growth has provided a mechanism for international macroeconomic policy coordination. The Framework has had some successes, including agreement on objectives for fiscal consolidation. However, post-crisis global growth has been neither strong nor balanced. Progress has also been slow in developing credible fiscal consolidation plans in some advanced countries and in increasing exchange rate flexibility in certain emerging economies. A stronger peer review process and enhanced analysis of international spillovers would increase the Framework’s influence on member policies.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Exchange rate regimes, Fiscal policy, International topics, Recent economic and financial developments JEL Code(s): E, E6, E61, F, F5, F53, F55
• February 21, 2013

  The U.S. Recovery from the Great Recession: A Story of Debt and Deleveraging

  Bank of Canada Review - Winter 2012-2013 Brady Lavender, Nicolas Parent

  The U.S. recovery from the Great Recession has been slow relative to other postwar-era recoveries in the United States. Encouraged by loose lending standards in the pre-crisis period, U.S. households took on unsustainable amounts of debt, making them vulnerable to adverse shocks. Subsequently, a considerable drop in asset prices forced households to repair their balance sheets. While there has been progress in household deleveraging, the government sector now needs to delever, which will restrain growth over the next few years.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Business fluctuations and cycles, International topics, Recent economic and financial developments JEL Code(s): E, E2, E21, E6, E60

• Asking About Wages: Results from the Bank of Canada’s Wage Setting Survey of Canadian Companies

  Staff Discussion Paper 2013-1 David Amirault, Paul Fenton, Thérèse Laflèche

  The Bank of Canada conducted a Wage Setting Survey with a sample of 200 private sector firms from mid-October 2007 to May 2008. Results indicate that wage adjustments for the Canadian non-union private workforce are overwhelmingly time dependent, with a fixed duration of one year, and are clustered in the first four months of the year, suggesting that wage stickiness may not be constant over the year.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Labour markets, Monetary policy transmission JEL Code(s): E, E2, E24, J, J3, J33, M, M5, M52

• Financial Development and the Volatility of Income

  Staff Working Paper 2013-4 Tiago Pinheiro, Francisco Rivadeneyra, Marc Teignier

  This paper presents a general equilibrium model with endogenous collateral constraints to study the relationship between financial development and business cycle fluctuations in a cross-section of economies with different sizes of their financial sector.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Financial stability JEL Code(s): E, E3, E32, E6, E60

• Real-financial Linkages through Loan Default and Bank Capital

  Staff Working Paper 2013-3 Tamon Takamura

  Many studies in macroeconomics argue that financial frictions do not amplify the impacts of real shocks. This finding is based on models without endogenous default on loans and bank capital. Using a model featuring endogenous interactions between firm default and bank capital, this paper revisits the propagation mechanisms of real and financial shocks.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Financial stability, Financial system regulation and policies, Interest rates JEL Code(s): E, E3, E32, E4, E44, E6, E69

• House Prices, Consumption and the Role of Non-Mortgage Debt

  Staff Working Paper 2013-2 Katya Kartashova, Ben Tomlin

  This paper examines the relationship between house prices and consumption, through the use of debt. Using unique Canadian household-level data that reports the uses of debt, we begin by looking at the relationship between house prices and debt.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Domestic demand and components JEL Code(s): D, D1, D10, D14, D3, D31, E, E2, E21

• The Cyclicality of Sales, Regular and Effective Prices: Business Cycle and Policy Implications

  Staff Working Paper 2013-1 Olivier Coibion, Yuriy Gorodnichenko, Gee Hee Hong

  We study the cyclical properties of sales, regular price changes and average prices paid by consumers (“effective” prices) using data on prices and quantities sold for numerous retailers across many U.S. metropolitan areas.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E3, E4, E5