E24 - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital

• Monetary Policy Transmission amid Demand Reallocations

  Staff Working Paper 2024-42 Julien Bengui, Lu Han, Gaelan MacKenzie

  We analyze the transmission of monetary policy during different phases of a sectoral demand reallocation episode when there are frictions to increasing production in a sector. Monetary policy is more effective in reducing inflation when a larger proportion of sectors are expanding or expect to expand in the near future.

  Content Type(s): Staff research, Staff working papers Topic(s): Domestic demand and components, Inflation and prices, Monetary policy transmission JEL Code(s): E, E1, E12, E2, E24, E3, E31, E5, E52

• From Micro to Macro Hysteresis: Long-Run Effects of Monetary Policy

  Staff Working Paper 2024-39 Felipe Alves, Giovanni L. Violante

  We explore the long-run effects of a monetary policy shock in a Heterogeneous Agent New Keynesian model built on the micro evidence that job losses lead to persistently lower individual earnings through a combination of skill decay and abandonment of the labour force.

  Content Type(s): Staff research, Staff working papers Topic(s): Labour markets, Monetary policy transmission JEL Code(s): E, E2, E21, E24, E3, E31, E32, E5, E52, J, J2, J24, J6, J64

• Let’s Get Physical: Impacts of Climate Change Physical Risks on Provincial Employment

  Staff Working Paper 2024-32 Thibaut Duprey, Soojin Jo, Geneviève Vallée

  We analyze 40 years’ worth of natural disasters using a local projection framework to assess their impact on provincial labour markets in Canada. We find that disasters decrease hours worked within a week and lower wage growth in the medium run. Our study highlights that disasters affect vulnerable workers through the income channel.

  Content Type(s): Staff research, Staff working papers Topic(s): Climate change, Labour markets, Regional economic developments JEL Code(s): C, C3, C33, E, E2, E24, J, J3, Q, Q5, Q54

• Housing Affordability and Parental Income Support

  Staff Working Paper 2024-28 Jason Allen, Kyra Carmichael, Robert Clark, Shaoteng Li, Nicolas Vincent

  In many countries, the cost of housing has greatly outpaced income growth, leading to a housing affordability crisis. Leveraging Canadian loan-level data and quasi-experimental variation in payment-to-income constraints, we document an increasing reliance of first-time homebuyers on financial help from their parents, through mortgage co-signing. We show that parental support can effectively relax borrowing constraints—potentially to riskier borrowers.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial services, Financial system regulation and policies, Housing JEL Code(s): D, D6, D64, E, E2, E21, E24, G, G1, G18, G5, G51

• Sources of pandemic-era inflation in Canada: an application of the Bernanke and Blanchard model

  Staff Analytical Note 2024-13 Fares Bounajm, Jean Garry Junior Roc, Yang Zhang

  We explore the drivers of the surge in inflation in Canada during the COVID-19 pandemic. This work is part of a joint effort by 11 central banks using the model developed by Bernanke and Blanchard (2023) to identify similarities and differences across economies.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Economic models, Inflation and prices, Labour markets JEL Code(s): E, E2, E24, E3, E31, E37, E5, E52, E6