Monetary policy and uncertainty
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Perceived versus Calibrated Income Risks in Heterogeneous-Agent Consumption Models
Perceived income risks reported in a survey of consumer expectations are more heterogeneous and, on average, lower than indirectly calibrated risks based on panel data. They prove to be one explanation for why a large fraction of households hold very little liquid savings and why accumulated wealth is widely unequal across households. -
December 15, 2023
Lessons learned and looking ahead
In his year-end remarks, Governor Tiff Macklem discusses how lessons learned from recent economic volatility are reshaping the way the Bank of Canada conducts economic analysis and communicates with the public. -
December 15, 2023
The path to price stability
Governor Tiff Macklem discusses how the economy will continue to adjust to higher interest rates in the year ahead, and outlines what Canadians can expect from the Bank of Canada. -
A Blueprint for the Fourth Generation of Bank of Canada Projection and Policy Analysis Models
The fourth generation of Bank of Canada projection and policy analysis models seeks to improve our understanding of inflation dynamics, the supply side of the economy and the underlying risks faced by policy-makers coming from uncertainty about how the economy functions. -
Tattle-tails: Gauging downside risks using option prices
Options markets offer unique insights into the changing risks different assets face, which helps us better understand the broader risks to the Canadian economy. We show how option prices help reveal that investors did not anticipate large downside risks to either major Canadian banks or economic growth during the March 2023 financial sector system stress, a period when policy-makers and investors were unsure of what the future held for Canada’s economy. -
Time Use and Macroeconomic Uncertainty
We estimate the effects of economic uncertainty on time use and discuss its macroeconomic implications. We develop a model to demonstrate that substitution between market and non-market work provides an additional insurance margin to households, weakening precautionary savings and labour supply and lowering aggregate demand, ultimately amplifying the contractionary effects of uncertainty. -
A Review of the Bank of Canada’s Support of Key Financial Markets During the COVID-19 Crisis
The COVID-19 pandemic placed unprecedented strain on the global financial system. We describe how the Bank of Canada responded to the rapidly deteriorating liquidity in core Canadian fixed-income markets. -
Turning Words into Numbers: Measuring News Media Coverage of Shortages
We develop high-frequency, news-based indicators using natural language processing methods to analyze news media texts. Our indicators track both supply (raw, intermediate and final goods) and labour shortages over time. They also provide weekly time-varying topic narratives about various types of shortages. -
Introducing the Bank of Canada’s Market Participants Survey
The Market Participants Survey (MPS) gathers financial market participants’ expectations for key macroeconomic and financial variables and for monetary policy. This staff analytical note describes the MPS’s objectives and main features, its process and design, and how Bank of Canada staff use the results.