C9 - Design of Experiments

• The Consumer Value Proposition for a Hypothetical Digital Canadian Dollar

  Staff Discussion Paper 2024-16 Martine Warren, Bill Laur, Ted Garanzotis, Sebastian Hernandez

  We explore the consumer value proposition of a hypothetical Digital Canadian Dollar, adoption considerations and the users who would benefit most from this potential new payment method. We employ a design-thinking consultation methodology, allowing participants to interact with research prototypes of increasing complexity to reveal user preferences, constraints and adoption influences.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Accessibility, Bank notes, Central bank research, Digital currencies and fintech JEL Code(s): C, C9, D, D1, D12, E, E4, E42, E5, E58, O, O3, O33

• Non-Parametric Identification and Testing of Quantal Response Equilibrium

  Staff Working Paper 2024-24 Johannes Hoelzemann, Ryan Webb, Erhao Xie

  We show that the utility function and the error distribution are non-parametrically over-identified under Quantal Response Equilibrium (QRE). This leads to a simple test for QRE. We illustrate our method in a Monte Carlo exercise and a laboratory experiment.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Economic models JEL Code(s): C, C1, C14, C5, C57, C9, C92

• Communicating Inflation Uncertainty and Household Expectations

  Staff Working Paper 2023-63 Olena Kostyshyna, Luba Petersen

  We examine the value of direct communication to households about inflation and the uncertainty around inflation statistics. All types of information about inflation are effective at immediately managing inflation expectations, with information about outlooks being more effective and relevant than that about recent inflation and Bank targets.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Credibility, Inflation and prices, Inflation targets, Monetary policy and uncertainty, Monetary policy communications JEL Code(s): C, C9, C93, D, D8, D84, E, E5, E59, E7

• Unmet Payment Needs and a Central Bank Digital Currency

  Staff Discussion Paper 2023-15 Christopher Henry, Walter Engert, Alexandra Sutton-Lalani, Sebastian Hernandez, Darcey McVanel, Kim Huynh

  We discuss the payment habits of Canadians both in the current payment environment and in a hypothetical cashless environment.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Bank notes, Central bank research, Digital currencies and fintech, Financial services JEL Code(s): C, C1, C12, C9, E, E4, O, O5, O54

• Is Money Essential? An Experimental Approach

  Staff Working Paper 2023-39 Janet Hua Jiang, Peter Norman, Daniela Puzzello, Bruno Sultanum, Randall Wright

  Monetary theory says that money is essential if it helps to achieve better incentive-feasible outcomes. We test this in the laboratory.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Economic models JEL Code(s): C, C9, C92, E, E4, E5

• Pricing Indefinitely Lived Assets: Experimental Evidence

  Staff Working Paper 2023-25 John Duffy, Janet Hua Jiang, Huan Xie

  We study the trading of an asset with bankruptcy risk. The traded price of the asset is, on average, 40% of the expected total dividend payments. We investigate which economic models can explain the low traded price.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Financial markets JEL Code(s): C, C9, C91, C92, D, D8, D81, G, G1, G12

• Learning in a Complex World: Insights from an OLG Lab Experiment

  Staff Working Paper 2023-13 Cars Hommes, Stefanie J. Huber, Daria Minina, Isabelle Salle

  This paper brings novel insights into group coordination and price dynamics in complex environments. We implement a chaotic overlapping-generation model in the lab and find that group coordination is always on the steady state or on the two-cycle and that behavior is non-monotonic.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): C, C6, C62, C68, C9, C91, C92, E, E1, E13, E7, E70, G, G1, G12, G4, G41

• Inflation, Output, and Welfare in the Laboratory

  Staff Working Paper 2023-11 Janet Hua Jiang, Daniela Puzzello, Cathy Zhang

  We investigate the effect of inflation on output and welfare in the laboratory. Consistent with monetary theory, we find that inflation acts as a tax on monetary exchange and reduces output and welfare.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Inflation: costs and benefits, Monetary policy JEL Code(s): C, C9, C92, D, D8, D83, E, E4, E40

• Cash, COVID-19 and the Prospects for a Canadian Digital Dollar

  Staff Discussion Paper 2022-17 Walter Engert, Kim Huynh

  We provide an analysis of cash trends in Canada before and during the COVID-19 pandemic. We also consider the potential two scenarios for issuance of a central bank digital currency in Canada: the emergence of a cashless society or the widespread use of an alternative digital currency in Canada. Finally, we discuss the Canadian experience in maintaining cash as an efficient and accessible method of payment and store of value.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Bank notes, Central bank research, Coronavirus disease (COVID-19), Digital currencies and fintech, Econometric and statistical methods JEL Code(s): C, C1, C12, C9, E, E4, O, O5, O54

• A Horse Race of Monetary Policy Regimes: An Experimental Investigation

  Staff Working Paper 2022-33 Olena Kostyshyna, Luba Petersen, Jing Yang

  How should central banks design monetary policy in stable times and during recessions? We run a horse race between five monetary policy frameworks in an experimental laboratory to assess how well the different approaches can manage the public’s expectations and stabilize the economy.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets, Monetary policy, Monetary policy communications, Monetary policy framework JEL Code(s): C, C9, D, D8, D84, E, E5, E52, E58