C9 - Design of Experiments
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Communicating Inflation Uncertainty and Household Expectations
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. -
Unmet Payment Needs and a Central Bank Digital Currency
We discuss the payment habits of Canadians both in the current payment environment and in a hypothetical cashless environment. -
Is Money Essential? An Experimental Approach
Monetary theory says that money is essential if it helps to achieve better incentive-feasible outcomes. We test this in the laboratory. -
Pricing Indefinitely Lived Assets: Experimental Evidence
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. -
Learning in a Complex World: Insights from an OLG Lab Experiment
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. -
Inflation, Output, and Welfare in the Laboratory
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. -
Cash, COVID-19 and the Prospects for a Canadian Digital Dollar
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. -
A Horse Race of Monetary Policy Regimes: An Experimental Investigation
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. -
Cash and COVID-19: What happened in 2021
Using data from the Bank Note Distribution System and consumer surveys, we find that bank notes in circulation remained high through 2021. Canadians continued to rely on electronic methods of payment, but a significant share also continued using cash for payments.