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Communicating Uncertainty in Monetary Policy

Staff Discussion Paper 2017-14 Sharon Kozicki, Jill Vardy
While central banks cannot provide complete foresight with respect to their future policy actions, it is in the interests of both central banks and market participants that central banks be transparent about their reaction functions and how they may evolve in response to economic developments, shocks, and risks to their outlooks.

Monetary Policy Under Uncertainty: Practice Versus Theory

Staff Discussion Paper 2017-13 Rhys R. Mendes, Stephen Murchison, Carolyn A. Wilkins
For central banks, conducting policy in an environment of uncertainty is a daily fact of life. This uncertainty can take many forms, ranging from incomplete knowledge of the correct economic model and data to future economic and geopolitical events whose precise magnitudes and effects cannot be known with certainty.

Understanding the Time Variation in Exchange Rate Pass-Through to Import Prices

Staff Discussion Paper 2017-12 Rose Cunningham, Min Jae Kim, Christian Friedrich, Kristina Hess
In this paper, we analyze the presence of time variation in the pass-through from the nominal effective exchange rate to import prices for 24 advanced economies over the period 1995–2015. In line with earlier studies in the literature, we find substantial heterogeneity in the level of exchange rate pass-through across countries.

What’s Up with Unit Non-Response in the Bank of Canada’s Business Outlook Survey? The Effect of Staff Tenure

Staff Discussion Paper 2017-11 Sarah Miller, David Amirault, Laurent Martin
Since 1997, the Bank of Canada’s regional offices have been conducting the Business Outlook Survey (BOS), a quarterly survey of business conditions. Survey responses are gathered through face-to-face, confidential consultations with a sample of private sector firms representative of the various sectors, firm sizes and regions across Canada.

Fintech: Is This Time Different? A Framework for Assessing Risks and Opportunities for Central Banks

Staff Discussion Paper 2017-10 Meyer Aaron, Francisco Rivadeneyra, Samantha Sohal
We investigate the risks and opportunities to the mandates of central banks arising from fintech developments.

What Explains Month-End Funding Pressure in Canada?

Staff Discussion Paper 2017-9 Christopher S. Sutherland
The Canadian overnight repo market persistently shows signs of latent funding pressure around month-end periods. Both the overnight repo rate and Bank of Canada liquidity provision tend to rise in these windows. This paper proposes three non-mutually exclusive hypotheses to explain this phenomenon.

A Three‐Frequency Dynamic Factor Model for Nowcasting Canadian Provincial GDP Growth

Staff Discussion Paper 2017-8 Tony Chernis, Gabriella Velasco, Calista Cheung
This paper estimates a three‐frequency dynamic factor model for nowcasting Canadian provincial gross domestic product (GDP). Canadian provincial GDP is released by Statistics Canada on an annual basis only, with a significant lag (11 months).

Methodology for Assigning Credit Ratings to Sovereigns

Staff Discussion Paper 2017-7 Philippe Muller, Jérôme Bourque
The investment of foreign exchange reserves or other asset portfolios requires an assessment of the credit quality of investment counterparties. Traditionally, foreign exchange reserve and asset managers have relied on credit rating agencies (CRAs) as the main source for credit assessments.

Multilateral Development Bank Credit Rating Methodology: Overcoming the Challenges in Assessing Relative Credit Risk in Highly Rated Institutions Based on Public Data

Staff Discussion Paper 2017-6 David Xiao Chen, Philippe Muller, Hawa Wagué
The investment of foreign exchange reserves or other asset portfolios requires an assessment of the credit quality of counterparties. Traditionally, foreign exchange reserve managers and other investors have relied on credit rating agencies (CRAs) as the main source for credit assessments.

Assessing the Business Outlook Survey Indicator Using Real-Time Data

Staff Discussion Paper 2017-5 Lise Pichette, Marie-Noëlle Robitaille
Every quarter, the Bank of Canada conducts quarterly consultations with businesses across Canada, referred to as the Business Outlook Survey (BOS). A principal-component analysis conducted by Pichette and Rennison (2011) led to the development of the BOS indicator, which summarizes survey results and is used by the Bank as a gauge of overall business sentiment.
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