Staff research

• Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform

  Staff Working Paper 2021-15 Gabriela Galassi

  How do firms change their employment decisions when tax benefits for low-earning workers are expanded? Some firms increase employment overall, whereas others replace high-earning workers with low-earning workers, according to German linked employer-employee data.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Firm dynamics, Labour markets JEL Code(s): E, E2, E24, E6, E64, H, H2, H20, H24, H3, H32, I, I3, I38, J, J2, J23, J3, J38

• What cured the TSX Equity index after COVID-19?

  Staff Analytical Note 2021-3 Guillaume Ouellet Leblanc, Jean-Sébastien Fontaine, Ryan Shotlander

  The TSX index rose by 9.5 percent in November 2020, adding large gains to an already sharp V-shaped recovery. The economic outlook improved at that time as well. We ask whether the stock market gains since last autumn are due to improving forecasts of firms’ earnings.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Asset pricing, Coronavirus disease (COVID-19), Financial markets JEL Code(s): G, G1, G12, G14

• Occasionally Binding Constraints in Large Models: A Review of Solution Methods

  Staff Discussion Paper 2021-5 Jonathan Swarbrick

  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.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): C, C6

• Non-bank financial intermediation in Canada: a pulse check

  Staff Analytical Note 2021-2 Rohan Arora, Guillaume Bédard-Pagé, Philippe Besnier, Hayden Ford, Alan Walsh

  The Canadian non-bank financial intermediation (NBFI) sector saw strong growth in 2018 and 2019. In 2020, COVID‑19 caused a financial shock. We provide a preliminary analysis on the impact of COVID‑19 on the sector as well as an update on its growth.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Coronavirus disease (COVID-19), Financial institutions, Financial markets, Financial stability JEL Code(s): G, G0, G01, G2, G20, G23

• Secular Economic Changes and Bond Yields

  Staff Working Paper 2021-14 Bruno Feunou, Jean-Sébastien Fontaine

  We investigate the economic forces behind the secular decline in bond yields. Before the anchoring of inflation in the mid-1990s, nominal shocks drove inflation, output and bond yields. Afterward, the impacts of nominal shocks were much less significant.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Econometric and statistical methods, Interest rates, Monetary policy and uncertainty, Potential output JEL Code(s): E, E4, E43, G, G1, G12

• Debt-Relief Programs and Money Left on the Table: Evidence from Canada's Response to COVID-19

  Staff Working Paper 2021-13 Jason Allen, Robert Clark, Shaoteng Li, Nicolas Vincent

  During the COVID-19 pandemic, Canadian financial institutions offered debt-relief programs to help borrowers cope with job losses and economic insecurity. We consider the low take-up rates for these programs and suggest that to be effective, such programs must be visible and easy to use.

  Content Type(s): Staff research, Staff working papers Topic(s): Coronavirus disease (COVID-19), Credit and credit aggregates, Debt management JEL Code(s): G, G3, G31, H, H5

• Complementarities Between Fiscal Policy and Monetary Policy—Literature Review

  Staff Discussion Paper 2021-4 Wei Dong, Geoffrey R. Dunbar, Christian Friedrich, Dmitry Matveev, Romanos Priftis, Lin Shao

  This paper surveys and summarizes the literature on how fiscal policy and monetary policy can complement each other in stabilizing economic activity.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Fiscal policy, Monetary policy JEL Code(s): E, E5, E52, E58, E6, E62, E63

• Imperfect Banking Competition and Macroeconomic Volatility: A DSGE Framework

  Staff Working Paper 2021-12 Jiaqi Li

  How do banks adjust their loan rate markup in response to macroeconomic shocks?

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Financial institutions, Interest rates JEL Code(s): E, E3, E32, E4, E44, G, G2, G21, L, L1, L13

• A Generalized Endogenous Grid Method for Default Risk Models

  Staff Working Paper 2021-11 Youngsoo Jang, Soyoung Lee

  Models with default options are hard to solve. We propose an extension of the endogenous grid method that solves default risk models more efficiently and accurately.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Credit risk management JEL Code(s): C, C6, C63, E, E3, E37

• Monetary Policy Pass-Through with Central Bank Digital Currency

  Staff Working Paper 2021-10 Janet Hua Jiang, Yu Zhu

  Many central banks are considering issuing a central bank digital currency (CBDC). This would introduce a new policy tool—interest on CBDC. We investigate how this new tool would interact with traditional monetary policy tools, such as the interest on central bank reserves.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Monetary policy transmission JEL Code(s): E, E5, E50, E52