Staff analytical notes

• Un examen plus approfondi des pressions salariales au Canada

  Staff Analytical Note 2016-6 Dany Brouillette, Laurence Savoie-Chabot

  In this note, we provide a brief outline of the recent developments in wage measures in Canada. We then assess whether wage growth is consistent with its fundamentals.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Labour markets, Productivity JEL Code(s): E, E2, E24, J, J3, J30

• Implementing Market-Based Indicators to Monitor Vulnerabilities of Financial Institutions

  Staff Analytical Note 2016-5 Cameron MacDonald, Maarten van Oordt, Robin Scott

  This note introduces several market-based indicators and examines how they can further inform the Bank of Canada’s vulnerability assessment of Canadian financial institutions. Market-based indicators of leverage suggest that the solvency risk for major Canadian banks has increased since the beginning of the oil-price correction in the second half of 2014.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Financial institutions, Financial stability JEL Code(s): G, G1, G10, G2, G21

• April 2016 Annual Reassessment of Potential Output in Canada

  Staff Analytical Note 2016-4 Andrew Agopsowicz, Dany Brouillette, Shutao Cao, Natalia Kyui, Pierre St-Amant

  This note summarizes the Bank of Canada’s 2016 annual reassessment of potential output growth, which is projected to be 1.5 per cent over 2016–18 and 1.6 per cent in 2019–20. This projection is weaker than the one presented in the April 2015 Monetary Policy Report.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Labour markets, Potential output, Productivity

• Canadian Labour Market Dispersion: Mind the (Shrinking) Gap

  Staff Analytical Note 2016-3 David Amirault, Naveen Rai

  Shocks to a currency area can and often do have asymmetric impacts on its regions that, in the absence of perfect labour mobility, lead to gaps in relative labour market performance. Witness, for example, the effects of the 2008/09 recession and subsequent financial crisis in Europe on the dispersion of employment rates across the euro area – and to a lesser extent the United States.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Labour markets, Regional economic developments JEL Code(s): J, J0, J01, R, R2, R23

• Predictive Ability of Commodity Prices for the Canadian Dollar

  Staff Analytical Note 2016-2 Kimberly Berg, Pierre Guérin, Yuko Imura

  Recent sharp declines in commodity prices and the simultaneous depreciation of the Canadian dollar (CAD) relative to the U.S. dollar (USD) have rekindled an interest in the relationship between commodity prices and the CAD-USD exchange rate.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Econometric and statistical methods, Exchange rates

• The Complex Adjustment of the Canadian Economy to Lower Commodity Prices

  Staff Analytical Note 2016-1 Julien Champagne, Nikita Perevalov, Hope Pioro, Dany Brouillette, Andrew Agopsowicz

  In this analytical note, we provide a comprehensive assessment of the complex structural adjustment facing the Canadian economy following the commodity price decline since mid-2014. We quantify separately the impacts coming from the commodity sector restructuring and the broader effect of significantly lower terms of trade.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Business fluctuations and cycles, Exchange rates, Labour markets, Potential output, Recent economic and financial developments JEL Code(s): E, E1, E17, E2, E27, E5, E52, J, J2, Q, Q0, Q00

• Credit Cards: Disentangling the Dual Use of Borrowing and Spending

  Staff Analytical Note 2015-3 Olga Bilyk, Brian Peterson

  Over the past 15 years, aggregate credit card balances have been increasing, except for a brief spell in the aftermath of the 2007–09 financial crisis. Determining whether the growing balances are due to increased usage of credit cards as a method of payment or whether they reflect increased short-term borrowing is challenging because aggregate balances are snapshots of charges on credit cards before households make their monthly payments.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Credit and credit aggregates, Financial stability

• Estimating Canada’s Effective Lower Bound

  Staff Analytical Note 2015-2 Jonathan Witmer, Jing Yang

  In 2009, the Bank of Canada set its effective lower bound (ELB) at 25 basis points (bps). Given the recent experience of Sweden, Denmark, Switzerland and the euro area with negative interest rates, we examine the economics of negative interest rates and suggest that cash storage costs are the source of a negative lower bound on interest rates.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Central bank research, Monetary policy framework, Monetary policy implementation JEL Code(s): D, D5, D53, E, E4, E41, E43, E5, E58

• Foreign Flows and Their Effects on Government of Canada Yields

  Staff Analytical Note 2015-1 Bruno Feunou, Jean-Sébastien Fontaine, James Kyeong, Jesus Sierra

  Foreign investment flows into Government of Canada (GoC) bonds have surged since the financial crisis. Our empirical analysis suggests that foreign flows of $150 billion lowered the 10-year GoC bond yield by 100 basis points between 2009 and 2012.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): International financial markets, International topics, Monetary policy transmission JEL Code(s): F, F3, F32