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2399
result(s)
Frictional Capital Reallocation I: Ex Ante Heterogeneity
Staff Working Paper 2019-4
Randall Wright,
Sylvia Xiaolin Xiao,
Yu Zhu
This paper studies dynamic general equilibrium models where firms trade capital in frictional markets. Gains from trade arise due to ex ante heterogeneity: some firms are better at investment, so they build capital in the primary market; others acquire it in the secondary market.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Monetary policy
JEL Code(s):
E,
E2,
E22,
E4,
E44
Can Capital Deepening Explain the Global Decline in Labor’s Share?
Staff Working Paper 2019-3
Andrew Glover,
Jacob Short
We estimate an aggregate elasticity of substitution between capital and labor near or below one, which implies that capital deepening cannot explain the global decline in labor's share. Our methodology derives from transition paths in the neo-classical growth model.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Firm dynamics,
International topics,
Labour markets
JEL Code(s):
E,
E1,
E13,
E2,
E22,
E25,
J,
J3
The Productivity Slowdown in Canada: An ICT Phenomenon?
Staff Working Paper 2019-2
Jeffrey Mollins,
Pierre St-Amant
We ask whether a weaker contribution of information and communication technologies (ICT) to productivity growth could account for the productivity slowdown observed in Canada since the early 2000s. To answer this question, we consider several methods capturing channels through which ICT could affect aggregate productivity growth.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Productivity
JEL Code(s):
D,
D2,
D24,
O,
O4,
O41,
O47
A Framework for Analyzing Monetary Policy in an Economy with E-money
Staff Working Paper 2019-1
Yu Zhu,
Scott Hendry
This paper considers an economy where central-bank-issued fiat money competes with privately issued e-money. We study a policy-setting game between the central bank and the e-money issuer and find (1) the optimal monetary policy of the central bank depends on the policy of the private issuer and may deviate from the Friedman rule; (2) multiple equilibria may exist; (3) when the economy approaches a cashless state, the central bank’s optimal policy improves the market power of the e-money issuer and can lead to a discrete decrease in welfare and a discrete increase in inflation; and (4) first best cannot be achieved.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Digital currencies and fintech,
Monetary policy
JEL Code(s):
E,
E5,
E52
The Secular Decline of Forecasted Interest Rates
Staff Analytical Note 2019-1
Bruno Feunou,
Jean-Sébastien Fontaine
Canadian interest rates show a secular decline since the 1980s. Long-term survey-based forecasts of interest rates also declined, but less so and were more gradual. Our model-based estimates show an endpoint shifting over time in three phases: a decline between 1990 and 1995, a period of stability between 1996 and 2007, and a further decline since 2008. The current endpoint estimate remains clouded with uncertainty; this is an active area of research.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Financial markets,
Interest rates
JEL Code(s):
E,
E4,
E43,
G,
G1,
G12
Limited Commitment, Endogenous Credibility and the Challenges of Price-level Targeting
Staff Working Paper 2018-61
Gino Cateau,
Malik Shukayev
This paper studies the cost of limited commitment when a central bank has the discretion to adjust policy whenever the costs of honoring its past commitments become high. Specifically, we consider a central bank that seeks to implement optimal policy in a New Keynesian model by committing to a price-level target path.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Credibility,
Inflation targets,
Monetary policy framework
JEL Code(s):
E,
E3,
E31,
E5,
E52
Inference in Games Without Nash Equilibrium: An Application to Restaurants’ Competition in Opening Hours
Staff Working Paper 2018-60
Erhao Xie
This paper relaxes the Bayesian Nash equilibrium (BNE) assumption commonly imposed in empirical discrete choice games with incomplete information. Instead of assuming that players have unbiased/correct expectations, my model treats a player’s belief about the behavior of other players as an unrestricted unknown function. I study the joint identification of belief and payoff functions.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Econometric and statistical methods,
Market structure and pricing
JEL Code(s):
C,
C5,
C57,
L,
L1,
L13,
L8,
L85
Credibility, Flexibility and Renewal: The Evolution of Inflation Targeting in Canada
Staff Discussion Paper 2018-18
Thomas J. Carter,
Rhys R. Mendes,
Lawrence L. Schembri
In 1991, Canada became the second country to adopt an inflation target as a central pillar of its monetary policy framework. The regime has proven much more successful than initially expected, both in achieving price stability and in stabilizing the real economy against a wide range of shocks.
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Credibility,
Inflation targets,
Monetary policy,
Monetary policy framework
JEL Code(s):
E,
E5,
E52,
E58,
E6,
E61
The Role of Corporate Saving over the Business Cycle: Shock Absorber or Amplifier?
Staff Working Paper 2018-59
Xiaodan Gao,
Shaofeng Xu
We document countercyclical corporate saving behavior with the degree of countercyclicality varying nonmonotonically with firm size. We then develop a dynamic stochastic general equilibrium model with heterogeneous firms to explain the pattern and study its implications for business cycles.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Economic models
JEL Code(s):
E,
E2,
E20,
E22,
E3,
E32,
G,
G3,
G31,
G32