Posts
-
-
-
-
December 23, 2024
Release of the Bank of Canada’s summary of deliberations
On Monday, December 23, 2024, the Bank of Canada will publish a summary of the deliberations that took place ahead of its interest rate decision on December 11, 2024. -
CBDC in the Market for Payments at the Point of Sale: Equilibrium Impact and Incumbent Responses
We simulate introducing a central bank digital currency (CBDC) and consider consumer adoption, merchant acceptance and usage at the point of sale. Modest adoption frictions significantly inhibit CBDC market penetration along all three dimensions. Incumbent responses to restore pre-CBDC market shares are moderate to small and further reduce the impact of a CBDC. -
December 20, 2024
What is a central bank?
A central bank works to ensure a country’s economic stability and its citizens’ financial well-being. -
Bouncing Back: How Mothballing Curbs Prices
We investigate the macroeconomic impacts of mothballed businesses—those that closed temporarily—on sectoral equilibrium prices after a negative demand shock. Our results suggest that pandemic fiscal support for temporary closures may have eased inflationary pressures. -
The impact of a central bank digital currency on payments at the point of sale
We simulate the impact of a central bank digital currency (CBDC) on consumer adoption, merchant acceptance and use of different payment methods. Modest frictions that deter consumer adoption of a CBDC inhibit its market penetration. Minor pricing responses by financial institutions and payment service providers further reduce the impact of a CBDC. -
Consumer Search, Productivity Heterogeneity, Prices, Markups, and Pass-through: Theory and Estimation
We develop and estimate a search model in which identical consumers trade with price-setting firms that differ in productivity. We use the estimated model to characterize the qualitative and quantitative differences in prices and markups across firms. We explore how individual firms respond to changes in cost and demand and how they pass these through to their prices and markup. -
The Distributional Origins of the Canada-US GDP and Labour Productivity Gaps
We find the top 10% of the income distribution accounts for three-quarters of the gap in GDP per adult between Canada and the United States. The large gaps in income for high-income earners help distinguish between alternative explanations of this persistent gap in GDP per adult.