Staff research

• Stablecoin Assessment Framework

  Staff Discussion Paper 2021-6 Alejandro García, Bena Lands, Dennis Yanchus

  We offer relevant authorities a three-step assessment framework they can use to understand, identify and quantify the risks associated with stablecoin and other cryptocurrency arrangements.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Digital currencies and fintech, Financial institutions, Financial markets, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): D, D7, D78, D8, D81, G, G0, G01, G1, G18, O, O3, O38

• Examining the Impact of Home Purchase Restrictions on China’s Housing Market

  Staff Working Paper 2021-18 Zhentong Lu, Sisi Zhang, Jian Hong

  How do “cooling measures” in the housing market—policies aimed to stabilize prices—affect the market? We use a structural model of housing demand and price competition among developers to evaluate China’s home purchase restriction policies implemented in 2010–11.

  Content Type(s): Staff research, Staff working papers Topic(s): Housing, Market structure and pricing JEL Code(s): O, O1, O18, R, R3, R31, R38

• Trade and Market Power in Product and Labor Markets

  Staff Working Paper 2021-17 Gaelan MacKenzie

  Trade liberalizations increase the sales and input purchases of productive firms relative to their less productive domestic competitors. This reallocation affects firms’ market power in their product and input markets. I quantify how the labour market power of employers affects the distribution and size of the gains from trade.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Labour markets, Market structure and pricing, Productivity, Trade integration JEL Code(s): D, D4, D43, F, F1, F12, F6, J, L, L1, L13

• How Long is Forever in the Laboratory? Three Implementations of an Infinite-Horizon Monetary Economy

  Staff Working Paper 2021-16 Janet Hua Jiang, Daniela Puzzello, Cathy Zhang

  Standard monetary models adopt an infinite horizon with discounting. Testing these models in the lab requires implementing this horizon within a limited time frame. We compare three approaches to such an implementation and discuss their relative advantages.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Economic models, Inflation and prices JEL Code(s): C, C9, C92, D, D8, D83, E, E4, E40
• March 31, 2021

  Research Update - March 2021

  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

• Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform

  Staff Working Paper 2021-15 Gabriela Galassi

  How do firms change their employment decisions when tax benefits for low-earning workers are expanded? Some firms increase employment overall, whereas others replace high-earning workers with low-earning workers, according to German linked employer-employee data.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Firm dynamics, Labour markets JEL Code(s): E, E2, E24, E6, E64, H, H2, H20, H24, H3, H32, I, I3, I38, J, J2, J23, J3, J38

• What cured the TSX Equity index after COVID-19?

  Staff Analytical Note 2021-3 Guillaume Ouellet Leblanc, Jean-Sébastien Fontaine, Ryan Shotlander

  The TSX index rose by 9.5 percent in November 2020, adding large gains to an already sharp V-shaped recovery. The economic outlook improved at that time as well. We ask whether the stock market gains since last autumn are due to improving forecasts of firms’ earnings.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Asset pricing, Coronavirus disease (COVID-19), Financial markets JEL Code(s): G, G1, G12, G14

• Occasionally Binding Constraints in Large Models: A Review of Solution Methods

  Staff Discussion Paper 2021-5 Jonathan Swarbrick

  Solving macroeconomic models is difficult. One challenge is the occasionally binding constraint of the zero lower bound on nominal interest rates. This paper reviews various ways to solve models that include this feature.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): C, C6

• Non-bank financial intermediation in Canada: a pulse check

  Staff Analytical Note 2021-2 Rohan Arora, Guillaume Bédard-Pagé, Philippe Besnier, Hayden Ford, Alan Walsh

  The Canadian non-bank financial intermediation (NBFI) sector saw strong growth in 2018 and 2019. In 2020, COVID‑19 caused a financial shock. We provide a preliminary analysis on the impact of COVID‑19 on the sector as well as an update on its growth.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Coronavirus disease (COVID-19), Financial institutions, Financial markets, Financial stability JEL Code(s): G, G0, G01, G2, G20, G23

• Secular Economic Changes and Bond Yields

  Staff Working Paper 2021-14 Bruno Feunou, Jean-Sébastien Fontaine

  We investigate the economic forces behind the secular decline in bond yields. Before the anchoring of inflation in the mid-1990s, nominal shocks drove inflation, output and bond yields. Afterward, the impacts of nominal shocks were much less significant.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Econometric and statistical methods, Interest rates, Monetary policy and uncertainty, Potential output JEL Code(s): E, E4, E43, G, G1, G12