E3 - Prices, Business Fluctuations, and Cycles
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How Should Unemployment Insurance Vary over the Business Cycle?
Should unemployment benefits be more generous during economic downturns? The optimal amount and duration of benefit payments ultimately depend on the demographic and wealth characteristics of benefit recipients. -
Understanding Trend Inflation Through the Lens of the Goods and Services Sectors
The goods and services sectors have experienced considerably different dynamics over the past three decades. Our goal in this paper is to understand how such contrasting behaviors at the sectoral level affect the aggregate level of trend inflation dynamics. -
Potential output in Canada: 2020 reassessment
After COVID-19, we expect potential output growth to stabilize around 1.2 percent. This is lower than the 2010–18 average growth of 1.8 percent. Relative to the April 2019 reassessment, the growth profile is revised down. Given the unknown course of the pandemic, uncertainty around these estimates is higher than in previous years. -
Forward Guidance and Expectation Formation: A Narrative Approach
How exactly does forward guidance influence interest rate expectations? -
Cyclicality of Schooling: New Evidence from Unobserved Components Models
What is the time-varying impact of economic cycles on decisions to invest in human capital? -
What do high-frequency expenditure network data reveal about spending and inflation during COVID‑19?
The official consumer price index (CPI) inflation measure, based on a fixed basket set before the COVID 19 pandemic, may not fully reflect what consumers are currently experiencing. We partnered with Statistics Canada to construct a more representative index for the pandemic with weights based on real-time transaction and survey data. -
Average is Good Enough: Average-inflation Targeting and the ELB
The Great Recession and current pandemic have focused attention on the constraint on nominal interest rates from the effective lower bound. -
Endogenous Time Variation in Vector Autoregressions
We introduce a new class of time-varying parameter vector autoregressions (TVP-VARs) where the identified structural innovations are allowed to influence — contemporaneously and with a lag — the dynamics of the intercept and autoregressive coefficients in these models. -
Interest Rate Uncertainty as a Policy Tool
We study a novel policy tool—interest rate uncertainty—that can be used to discourage inefficient capital inflows and to adjust the composition of external account between shortterm securities and foreign direct investment (FDI).