Staff research

• Characterizing Canada’s Export Sector by Industry: A Supply-Side Perspective

  Staff Analytical Note 2018-27 Taylor Webley

  This note examines supply-side trends in Canadian non-energy industries and their implications for export performance. Between 2002 and 2016, capital stocks and total labour input declined in many industries that export non-energy goods. These soft trends in the factors of production have likely contributed to the decline in non-energy exports in about half of the goods industries analyzed in this note.

  Content Type(s): Staff research, Staff analytical notes Topic(s): International topics, Productivity JEL Code(s): E, E2, E22, E23, E24, F, F1, F19

• Decomposing Canada’s Market Shares: An Update

  Staff Analytical Note 2018-26 Nicholas Labelle

  Building on the shift-share analysis of Barnett and Charbonneau (2015), this note decomposes Canada’s market shares in the United States, Europe and China for imports of non-energy goods into competitiveness, preference shifts and an interaction term. We find that, despite the depreciation of the dollar, Canada continued to lose market share over 2014–17 (around 0.4 percentage points lost per year on average over four years).

  Content Type(s): Staff research, Staff analytical notes Topic(s): International topics JEL Code(s): F, F1, F10, F14, F4

• What Is Restraining Non-Energy Export Growth?

  Staff Analytical Note 2018-25 Dany Brouillette, José Dorich, Chris D'Souza, Adrienne Gagnon, Claudia Godbout

  This note summarizes the key findings from Bank of Canada staff analytical work examining the reasons for the recent weakness in Canadian non-energy exports. Canada steadily lost market share in US non-energy imports between 2002 and 2017, mostly reflecting continued and broad-based competitiveness losses.

  Content Type(s): Staff research, Staff analytical notes Topic(s): International topics, Monetary policy, Recent economic and financial developments, Trade integration JEL Code(s): E, E5, E52, F, F1, F10, F14, F17

• Seeking Safety

  Staff Working Paper 2018-41 Toni Ahnert, Enrico Perotti

  The scale of safe assets suggests a structural demand for a safe wealth share beyond transaction and liquidity roles. We study how investors achieve a reference wealth level by combining self-insurance and contingent liquidation of investment. Intermediaries improve upon autarky, insuring investors with poor self-insurance and limiting liquidation.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions JEL Code(s): G, G2

• The Welfare Cost of Inflation Revisited: The Role of Financial Innovation and Household Heterogeneity

  Staff Working Paper 2018-40 Shutao Cao, Césaire Meh, José-Víctor Ríos-Rull, Yaz Terajima

  We document that, across households, the money consumption ratio increases with age and decreases with consumption, and that there has been a large increase in the money consumption ratio during the recent era of very low interest rates. We construct an overlapping generations (OLG) model of money holdings for transaction purposes subject to age (older households use more money), cohort (younger generations are exposed to better transaction technology), and time effects (nominal interest rates affect money holdings).

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation: costs and benefits JEL Code(s): E, E2, E21, E4, E41

• Sluggish Forecasts

  Staff Working Paper 2018-39 Monica Jain

  Given the influence that agents’ expectations have on key macroeconomic variables, it is surprising that very few papers have tried to extrapolate agents’ “true” expectations directly from the data. This paper presents one such approach, starting with the hypothesis that there is sluggishness in inflation and real GDP growth forecasts.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Inflation and prices JEL Code(s): E, E3, E31, E37

• Nowcasting Canadian Economic Activity in an Uncertain Environment

  Staff Discussion Paper 2018-9 Tony Chernis, Rodrigo Sekkel

  This paper studies short-term forecasting of Canadian real GDP and its expenditure components using combinations of nowcasts from different models. Starting with a medium-sized data set, we use a suite of common nowcasting tools for quarterly real GDP and its expenditure components.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Econometric and statistical methods JEL Code(s): C, C5, C53, E, E3, E37, E5, E52
• July 31, 2018

  Research Update - July 2018

  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

• Time-Consistent Management of a Liquidity Trap with Government Debt

  Staff Working Paper 2018-38 Dmitry Matveev

  This paper studies optimal discretionary monetary and fiscal policy when the lower bound on nominal interest rates is occasionally binding in a model with nominal rigidities and long-term government debt. At the lower bound it is optimal for the government to temporarily reduce debt.

  Content Type(s): Staff research, Staff working papers Topic(s): Fiscal policy, Monetary policy JEL Code(s): E, E5, E52, E6, E62, E63

• The Extensive Margin of Trade and Monetary Policy

  Staff Working Paper 2018-37 Yuko Imura, Malik Shukayev

  This paper studies the effects of monetary policy shocks on firms’ participation in exporting. We develop a two-country dynamic stochastic general equilibrium model in which heterogeneous firms make forward-looking decisions on whether to participate in the export market and prices are staggered across firms and time.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Firm dynamics, International topics, Monetary policy JEL Code(s): E, E5, E52, F, F1, F12, F4, F44