Economic models

• May 11, 2017

  Why Is Global Business Investment So Weak? Some Insights from Advanced Economies

  Bank of Canada Review - Spring 2017 Robert Fay, Justin-Damien Guénette, Martin Leduc, Louis Morel

  Various drivers of business investment can be used to explain the underwhelming performance of investment in advanced economies since the global financial crisis, particularly since 2014. The slow growth in aggregate demand cannot by itself explain the full extent of the recent weakness in investment, which appears to be linked primarily to the collapse of global commodity prices and a rise in economic uncertainty. Looking ahead, business investment growth is likely to remain slower than in the pre-crisis period, largely because of structural factors such as population aging.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Business fluctuations and cycles, Domestic demand and components, Economic models, International topics, Monetary policy and uncertainty, Recent economic and financial developments JEL Code(s): C, C2, C22, D, D2, D24, D8, D80, E, E2, E22, F, F0, F01, G, G3, G31

• Vertical Specialization and Gains from Trade

  Staff Working Paper 2017-17 Patrick Alexander

  Multi-stage production is widely recognized as an important feature of the modern global economy. This feature has been incorporated into many state-of-the-art quantitative trade models, and has been shown to deliver significant additional gains from international trade.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, International topics, Trade integration JEL Code(s): F, F1, F11, F14, F6, F60

• Constrained Efficiency with Adverse Selection and Directed Search

  Staff Working Paper 2017-15 Mohammad Davoodalhosseini

  Constrained efficient allocation (CE) is characterized in a model of adverse selection and directed search (Guerrieri, Shimer, and Wright (2010)). CE is defined to be the allocation that maximizes welfare, the ex-ante utility of all agents, subject to the frictions of the environment.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Financial markets, Financial system regulation and policies, Market structure and pricing JEL Code(s): D, D8, D82, D83, E, E2, E24, G, G1, J, J3, J31, J6, J64

• Stability and Efficiency in Decentralized Two‐Sided Markets with Weak Preferences

  Staff Working Paper 2017-4 Radoslav Raykov

  Many decentralized markets are able to attain a stable outcome despite the absence of a central authority (Roth and Vande Vate, 1990). A stable matching, however, need not be efficient if preferences are weak. This raises the question whether a decentralized market with weak preferences can attain Pareto efficiency in the absence of a central matchmaker.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models JEL Code(s): C, C7, C78, D, D6, D61
• January 31, 2017

  Models and the Art and Science of Making Monetary Policy

  Remarks Stephen S. Poloz University of Alberta School of Business Edmonton, Alberta

  Governor Stephen S. Poloz discusses the evolution of economic models and the need for central bankers to apply judgment in using them.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Central bank research, Econometric and statistical methods, Economic models, Financial markets, International topics, Monetary policy and uncertainty