Staff discussion papers
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Occasionally Binding Constraints in Large Models: A Review of Solution Methods
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. -
Complementarities Between Fiscal Policy and Monetary Policy—Literature Review
This paper surveys and summarizes the literature on how fiscal policy and monetary policy can complement each other in stabilizing economic activity. -
Cash and COVID-19: The Effects of Lifting Containment Measures on Cash Demand and Use
Using Bank Note Distribution System data on the demand for cash up to September 2020, we find that demand was strong. This is true even though cash use for payments declined early in the pandemic. When mobility restrictions and lockdown measures were eased, cash use for payments increased sharply but remained less popular than electronic methods of payment. -
COVID-19 Crisis: Lessons Learned for Future Policy Research
One year later, we review the events that took place in Canadian fixed-income markets at the beginning of the COVID-19 crisis and propose potential policy research questions for future work. -
Qualitative Field Research in Monetary Policy Making
Central banks conduct research involving in-depth interviews with external parties—but little is known about how this information affects monetary policy. We address this gap by analyzing open-ended interviews with senior central bank economic and policy staff who work closely with policy decision-makers. -
Implementation and Effectiveness of Extended Monetary Policy Tools: Lessons from the Literature
This paper summarizes the literature on the performance of various extended monetary policy tools when conventional policy rates are constrained by the effective lower bound. We highlight issues that may arise when these tools are used by central banks of small open economies. -
A Reference Guide for the Business Outlook Survey
The Business Outlook Survey (BOS) has become an important part of monetary policy deliberations at the Bank of Canada and is also well known in Canadian policy and financial circles. This paper compiles more than 20 years of experience conducting the BOS and serves as a comprehensive reference manual. -
Can the Business Outlook Survey Help Improve Estimates of the Canadian Output Gap?
We investigate whether questions in the Bank of Canada’s Business Outlook Survey can provide useful signals for the output gap. -
Towards a HANK Model for Canada: Estimating a Canadian Income Process
How might one simulate a million realistic income paths and compute their statistical moments in under a second? Using CUDA-based methods to estimate the Canadian earnings process, I find that the distribution of labour income growth is sharply peaked with heavy tails—similar to that in the United States.