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2358
result(s)
We Didn’t Start the Fire: Effects of a Natural Disaster on Consumers’ Financial Distress
Staff Working Paper 2023-15
Anson T. Y. Ho,
Kim Huynh,
David T. Jacho-Chávez,
Geneviève Vallée
We use detailed consumer credit data to investigate the impact of the 2016 Fort McMurray wildfire, the costliest wildfire disaster in Canadian history, on consumers’ financial stress. We focus on the arrears of insured mortgages because of their important implications for financial institutions and insurers’ business risk and relevant management practices.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Climate change,
Credit and credit aggregates,
Econometric and statistical methods,
Financial stability
JEL Code(s):
C,
C2,
C21,
D,
D1,
D12,
G,
G2,
G21,
Q,
Q5,
Q54
Firms’ inflation expectations and price-setting behaviour in Canada: Evidence from a business survey
Staff Analytical Note 2023-3
Ramisha Asghar,
James Fudurich,
Jane Voll
Canadian firms’ expectations for high inflation may be influencing their price setting, supporting strong price growth and delays in the transmission of monetary policy. Using data from the Business Outlook Survey, we investigate the reasons behind widespread price growth seen in Canada in 2021 and early 2022.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Firm dynamics,
Inflation and prices,
Monetary policy transmission,
Recent economic and financial developments
JEL Code(s):
D,
D2,
D22,
E,
E3,
E31
A central bank digital currency for offline payments
Staff Analytical Note 2023-2
Cyrus Minwalla,
John Miedema,
Sebastian Hernandez,
Alexandra Sutton-Lalani
Offline functionality is a key consideration for a potential CBDC. We describe the different types of offline functionality based on their duration outside of network connection—either intermittent (for short periods) or extended (for longer periods). We discuss the advantages and drawbacks of each and consider implications for end-user devices, system resilience and universal accessibility.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Central bank research,
Digital currencies and fintech
JEL Code(s):
E,
E4,
E42,
E5,
E51,
E58,
O,
O3,
O31
On the Fragility of DeFi Lending
Staff Working Paper 2023-14
Jonathan Chiu,
Emre Ozdenoren,
Kathy Yuan,
Shengxing Zhang
We develop a dynamic model to capture key features of decentralized finance lending. We identify a price-liquidity feedback: the market outcome in any given period depends on agents' expectations about lending activities in future periods, with higher future price expectations leading to more lending and higher prices in that period.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Digital currencies and fintech,
Financial stability
JEL Code(s):
G,
G0,
G01,
G1,
G10
The Canadian Neutral Rate of Interest through the Lens of an Overlapping-Generations Model
Staff Discussion Paper 2023-5
Martin Kuncl,
Dmitry Matveev
We use a small open economy model with overlapping generations to evaluate secular dynamics of the neutral rate in Canada from 1980 to 2018. We find that changes in both foreign and domestic factors resulted in a protracted decline in the neutral rate.
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Economic models,
Interest rates,
Monetary policy
JEL Code(s):
E,
E2,
E21,
E22,
E4,
E43,
E5,
E50,
E52,
E58,
F,
F4,
F41
Learning in a Complex World: Insights from an OLG Lab Experiment
Staff Working Paper 2023-13
Cars Hommes,
Stefanie J. Huber,
Daria Minina,
Isabelle Salle
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.
The Role of Intermediaries in Selection Markets: Evidence from Mortgage Lending
Staff Working Paper 2023-12
Jason Allen,
Robert Clark,
Jean-François Houde,
Shaoteng Li,
Anna Trubnikova
This paper looks at the role mortgage brokers play in helping borrowers generate quotes and qualify for credit. We find that, on average, borrowers that engage with a mortgage broker pay lower interest rates. However, in about 15% of cases, borrowers are steered towards longer amortizing mortgages than they would have chosen absent a broker. Since mortgages with longer amortization have higher total interest costs over the entire life of the mortgage, this steering is expensive.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Financial institutions,
Financial services,
Market structure and pricing
JEL Code(s):
D,
D4,
G,
G2,
G21,
L,
L2
Inflation, Output, and Welfare in the Laboratory
Staff Working Paper 2023-11
Janet Hua Jiang,
Daniela Puzzello,
Cathy Zhang
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.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation and prices,
Inflation: costs and benefits,
Monetary policy
JEL Code(s):
C,
C9,
C92,
D,
D8,
D83,
E,
E4,
E40
Exporting and Investment Under Credit Constraints
Staff Working Paper 2023-10
Kim Huynh,
Robert Petrunia,
Joel Rodrigue,
Walter Steingress
We examine the relationship between firms’ performance and credit constraints affecting export market entry. Using administrative Canadian firm-level data, our findings show that new exporters (a) increase their productivity, (b) raise their leverage ratio and (c) increase investment. We estimate that 48 percent of Canadian manufacturers face binding credit constraints when deciding whether to enter export markets.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Econometric and statistical methods,
Firm dynamics,
International topics,
Productivity
JEL Code(s):
F,
F1,
F10,
F14,
F3,
F36,
G,
G2,
G20,
G28,
G3,
G32