Posts
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Adoption Costs of Financial Innovation: Evidence from Italian ATM Cards
The discrete choice to adopt a financial innovation affects a household’s exposure to inflation and transactions costs. We model this adoption decision as being subject to an unobserved cost. -
Banking Regulation and Market Making
We model how securities dealers respond to regulations on leverage, position and liquidity such as those imposed by the Basel III framework. We show that while asset prices exhibit greater price impact, bid-ask spreads do not change and trading volumes may even increase. -
Optimal Capital Regulation
We study constrained-efficient bank capital regulation in a model with market-imposed equity requirements. Banks hold equity buffers to insure against sudden loss of access to funding. However, in the model, banks choose to only partially self-insure because equity is privately costly. -
Canadian Bank Notes and Dominion Notes: Lessons for Digital Currencies
This paper studies the period in Canada when both private bank notes and government-issued notes (Dominion notes) were simultaneously in circulation. Because both of these notes shared many of the characteristics of today's digital currencies, the experience with these notes can be used to draw lessons about how digital currencies might perform. -
Stability and Efficiency in Decentralized Two‐Sided Markets with Weak Preferences
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. -
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February 9, 2017
Getting to the Core of Inflation
Deputy Governor Lawrence Schembri discusses the uses and measures of core inflation in the conduct of monetary policy. -
February 6, 2017
Bank of Canada announces winners of the second edition of The Governor’s Challenge
The Bank of Canada today announced that the team from McGill University won the second annual Governor’s Challenge, a student competition in which teams simulate the role of advisor to the Bank’s policy-makers. -
Price-Level Dispersion versus Inflation-Rate Dispersion: Evidence from Three Countries
Inflation can affect both the dispersion of commodity-specific price levels across locations (relative price variability, RPV) and the dispersion of inflation rates (relative inflation variability, RIV). Some menu-cost models and models of consumer search suggest that the RIV-inflation relationship could differ from the RPV-inflation relationship.