Staff working papers provide a forum for staff to publish work-in-progress research intended for journal publication.
1323
result(s)
Understanding Post-COVID Inflation Dynamics
Staff Working Paper 2022-50
Martin Harding,
Jesper Lindé,
Mathias Trabandt
We propose a macroeconomic model with a nonlinear Phillips curve that has a flat slope when inflationary pressures are subdued and steepens when inflationary pressures are elevated. Our model can generate more sizable inflation surges due to cost-push and demand shocks than a standard linearized model when inflation is high.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Central bank research,
Coronavirus disease (COVID-19),
Economic models,
Inflation and prices,
Inflation: costs and benefits,
Monetary policy,
Monetary policy implementation
JEL Code(s):
E,
E3,
E30,
E31,
E32,
E37,
E4,
E44,
E5,
E52
Monetary Policy, Credit Constraints and SME Employment
Staff Working Paper 2022-49
Julien Champagne,
Émilien Gouin-Bonenfant
We revisit an old question: how do financial constraints affect the transmission of monetary policy to the real economy? To answer this question, we propose a simple empirical strategy that combines firm-level employment and balance sheet data, identified monetary policy shocks and survey data on financing activities.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Credit and credit aggregates,
Econometric and statistical methods,
Firm dynamics,
Labour markets,
Monetary policy
JEL Code(s):
E,
E2,
E3,
E4,
E43,
E5,
E52,
G,
G3
Regulatory Requirements of Banks and Arbitrage in the Post-Crisis Federal Funds Market
Staff Working Paper 2022-48
Rodney J. Garratt,
Sofia Priazhkina
This paper explains the nature of interest rates in the U.S. federal funds market after the 2007-09 financial crisis. We build a model of the over-the-counter lending market that incorporates new aspects of the financial system: abundance of liquidity, different regulatory standards for banks, and arbitrage opportunities created by limited access to the facility granting interest on excess reserves.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Central bank research,
Economic models,
Financial institutions,
Financial markets,
Financial stability,
Financial system regulation and policies,
Wholesale funding
JEL Code(s):
E,
E4,
E42,
E5,
E58,
G,
G2,
G28
Are Working Hours Complements in Production?
Staff Working Paper 2022-47
Lin Shao,
Faisal Sohail,
Emircan Yurdagul
Using Canadian matched employer-employee data, we show that working hours of different workers are gross complements in production rather than perfect substitutes, as is typically assumed by macroeconomic models of production.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Economic models,
Labour markets
JEL Code(s):
E,
E2,
E23,
J,
J2,
J22,
J23,
J3,
J31
Stagflation and Topsy-Turvy Capital Flows
Staff Working Paper 2022-46
Julien Bengui,
Louphou Coulibaly
Unregulated capital flows are likely excessive during a stagflation episode, owing to a macroeconomic externality operating through the economy’s supply side. Inflows raise domestic wages and cause unwelcome upward pressure on firm costs, yet market forces likely generate such inflows. Optimal capital flow management instead requires net outflows.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Inflation and prices,
International financial markets,
International topics,
Monetary policy
JEL Code(s):
D,
D6,
D62,
E,
E5,
E52,
F,
F3,
F32,
F38,
F4,
F41
Fiscal Policy in the Age of COVID-19: Does It “Get in All of the Cracks”?
Staff Working Paper 2022-45
Pierre-Olivier Gourinchas,
Şebnem Kalemli-Özcan,
Veronika Penciakova,
Nicholas Sander
The COVID-19 pandemic has caused an atypical recession in which some sectors of the economy boomed and others collapsed. This required a unique fiscal policy reaction to both support firms and stimulate activity in sectors with slack. Was fiscal policy able to get where it was needed? Mostly, yes.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Coronavirus disease (COVID-19),
Firm dynamics,
Fiscal policy,
International topics
JEL Code(s):
D,
D5,
D57,
E,
E6,
E62,
F,
F4,
F41
Private Digital Cryptoassets as Investment? Bitcoin Ownership and Use in Canada, 2016-2021
Staff Working Paper 2022-44
Daniela Balutel,
Walter Engert,
Christopher Henry,
Kim Huynh,
Marcel Voia
We report on the dynamics of Bitcoin awareness and ownership from 2016 to 2021, using the Bank of Canada's Bitcoin Omnibus Surveys (BTCOS). Our analysis also helps understand Bitcoin owners who adopted during the COVID-19 and how they differ from long-term owners.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Bank notes,
Digital currencies and fintech,
Econometric and statistical methods
JEL Code(s):
C,
C1,
C12,
E,
E4,
O,
O5,
O51
Grasping De(centralized) Fi(nance) Through the Lens of Economic Theory
Staff Working Paper 2022-43
Jonathan Chiu,
Charles M. Kahn,
Thorsten Koeppl
We analyze the value proposition and limitations of decentralized finance (DeFi). Based on a distributed ledger and smart contracts, DeFi can guarantee the execution of financial contracts, potentially lowering the costs of intermediation and improving financial inclusion.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Digital currencies and fintech,
Payment clearing and settlement systems
JEL Code(s):
G,
G2
Behavioral Learning Equilibria in New Keynesian Models
Staff Working Paper 2022-42
Cars Hommes,
Kostas Mavromatis,
Tolga Özden,
Mei Zhu
We introduce behavioral learning equilibria (BLE) into DSGE models with boundedly rational agents using simple but optimal first order autoregressive forecasting rules. The Smets-Wouters DSGE model with BLE is estimated and fits well with inflation survey expectations. As a policy application, we show that learning requires a lower degree of interest rate smoothing.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Economic models,
Inflation and prices,
Monetary policy
JEL Code(s):
C,
C1,
C11,
D,
D8,
D83,
D84,
E,
E3,
E6,
E62