Staff research

• Digitalization and Inflation: A Review of the Literature

  Staff Analytical Note 2017-20 Karyne B. Charbonneau, Alexa Evans, Subrata Sarker, Lena Suchanek

  In the past few years, many have postulated that the possible disinflationary effects of digitalization could explain the subdued inflation in advanced economies. In this note, we review the evidence found in the literature. We look at three main channels.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, Market structure and pricing, Productivity JEL Code(s): D, D2, D22, E, E3, E31, L, L8, L81, O, O3, O33

• Digital Transformation in the Service Sector: Insights from Consultations with Firms in Wholesale, Retail and Logistics

  Staff Analytical Note 2017-19 Wei Dong, James Fudurich, Lena Suchanek

  Firms increasingly rely on digital technologies such as e-commerce, cloud computing, big data, digital tracking and digital platforms that are reshaping business operations, business models and market structures. In this context, the Bank of Canada consulted with firms in wholesale, retail and logistics, as well as with related industry associations to yield insights on the adoption of digital technologies.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Firm dynamics, Inflation and prices, Service sector JEL Code(s): D, D2, D22, E, E3, E31, L, L8, L81, L9, L92, O, O3, O33
• October 31, 2017

  Research Update - October 2017

  This monthly newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

  Content Type(s): Staff research, Research newsletters

• Identification of Random Resource Shares in Collective Households Without Preference Similarity Restrictions

  Staff Working Paper 2017-45 Geoffrey R. Dunbar, Arthur Lewbel, Krishna Pendakur

  Resource shares, defined as the fraction of total household spending going to each person in a household, are important for assessing individual material well-being, inequality and poverty. They are difficult to identify because consumption is measured typically at the household level, and many goods are jointly consumed, so that individual-level consumption in multi-person households is not directly observed.

  Content Type(s): Staff research, Staff working papers Topic(s): Domestic demand and components, Econometric and statistical methods JEL Code(s): C, C3, C31, D, D1, D11, D12, D13, I, I3, I32

• Alternative Scenario to the October 2017 MPR Base-Case Projection: Higher Potential Growth

  Staff Analytical Note 2017-18 Jing Yang, Ben Tomlin, Olivier Gervais

  We construct an alternative scenario in which trend labour input and business investment are stronger than that expected in the Bank of Canada’s base-case projection in the October 2017 Monetary Policy Report.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, Monetary policy, Potential output JEL Code(s): E, E2, E22, E24, E27, E5

• Global Factors and Inflation in Canada

  Staff Analytical Note 2017-17 Dany Brouillette, Laurence Savoie-Chabot

  This note investigates whether the recent weakness in inflation in Canada can be related to global factors not included in the current staff analytical framework (domestic slack, movements in commodity prices and in the exchange rate). A global common factor for inflation among selected advanced economies appears to contain marginal information for Canadian inflation beyond what is found in movements in commodity prices and the exchange rate.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, Recent economic and financial developments JEL Code(s): E, E3, E31

• Low Inflation in Advanced Economies: Facts and Drivers

  Staff Analytical Note 2017-16 Sanjana Bhatnagar, Anne-Katherine Cormier, Patrisha de Leon-Manlagnit, Elise Martin, Vikram Rai, Renaud St-Cyr, Subrata Sarker, Kristina Hess

  Since the global financial crisis, core inflation has been persistently below target in most advanced economies. Recently, it has weakened further in several advanced economies despite gradually diminishing slack. This note reviews recent developments in core inflation across advanced economies and identifies distinctive patterns across regions.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, International topics JEL Code(s): E, E0, E3, E31, F, F0

• Complementing the Credit Risk Assessment of Financial Counterparties with Market-Based Indicators

  Staff Analytical Note 2017-15 Guillaume Ouellet Leblanc, Maarten van Oordt

  The Bank’s internal credit risk assessment abilities are regularly enhanced. In this note, we present a recent innovation that extends the set of market-based indicators used in the credit risk assessment of financial counterparties.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Credit risk management, Financial institutions JEL Code(s): G, G1, G10, G2, G24

• Can the Canadian International Investment Position Stabilize a Slowing Economy?

  Staff Analytical Note 2017-14 Maxime Leboeuf, Chen Fan

  In this note, we find that valuation effects can act as an important stabilizer, strengthening Canada’s net external wealth when its economic outlook worsens relative to that of other countries.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Balance of payments and components, International financial markets JEL Code(s): F, F2, F21, F3, F32

• Measuring Limits of Arbitrage in Fixed-Income Markets

  Staff Working Paper 2017-44 Jean-Sébastien Fontaine, Guillaume Nolin

  We use relative value to measure limits to arbitrage in fixed-income markets. Relative value captures apparent deviations from no-arbitrage relationships. It is simple, intuitive and can be computed model-free for any bond.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Financial markets, International financial markets JEL Code(s): G, G1, G12