The Neutral Rate in Canada: 2019 Update Staff Analytical Note 2019-11 Thomas J. Carter, Xin Scott Chen, José Dorich This note provides an update on Bank of Canada staff’s assessment of the Canadian neutral rate. The neutral rate is the policy rate needed to keep output at its potential level and inflation at target once the effects of any cyclical shocks have dissipated. This medium- to long-run concept serves as a benchmark for gauging the degree of monetary stimulus provided by a given policy setting. Content Type(s): Staff research, Staff analytical notes Topic(s): Economic models, Interest rates, Monetary policy JEL Code(s): E, E4, E40, E43, E5, E50, E52, E58, F, F4, F41
Potential Output in Canada: 2019 Reassessment Staff Analytical Note 2019-10 Dany Brouillette, Julien Champagne, Carol Khoury, Natalia Kyui, Jeffrey Mollins, Youngmin Park Potential output is expected to grow on average at 1.8 per cent over 2019–21 and at 1.9 per cent in 2022. While the contribution of trend labour input to potential output growth is expected to decrease between 2019 and 2022, the contribution of trend labour productivity is projected to increase. Content Type(s): Staff research, Staff analytical notes Topic(s): Labour markets, Potential output, Productivity JEL Code(s): E, E0, E00, E2, E22, E23, E24, E3, E37, E6
April 15, 2019 Business Outlook Survey—Spring 2019 Results from the spring Business Outlook Survey point to a moderation from previously high levels of domestic and foreign demand for firms in most regions. Investment and employment intentions remain positive. Content Type(s): Publications, Business Outlook Survey
April 15, 2019 Senior Loan Officer Survey—First Quarter of 2019 Overall household lending conditions were once again unchanged this quarter. Although business lending conditions were unchanged overall, some marginal price easing was driven by corporate lending conditions. Content Type(s): Publications, Senior Loan Officer Survey
Could Canadian Bond Funds Add Stress to the Financial System? Staff Analytical Note 2019-9 Rohan Arora, Guillaume Bédard-Pagé, Guillaume Ouellet Leblanc, Ryan Shotlander We create a hypothetical scenario to study the role bond funds play in intensifying shocks to the financial system. Using data from 2018 and 2007, we find that bond funds play a larger role now than they did in the past. Content Type(s): Staff research, Staff analytical notes Topic(s): Financial markets, Financial stability JEL Code(s): G, G1, G2, G20, G23
Labor Mobility in a Monetary Union Staff Working Paper 2019-15 Daniela Hauser, Martin Seneca The optimal currency literature has stressed the importance of labor mobility as a precondition for the success of monetary unions. But only a few studies formally link labor mobility to macroeconomic adjustment and policy. In this paper, we study macroeconomic dynamics and optimal monetary policy in an economy with cyclical labor flows across two distinct regions that share trade links and a common monetary framework. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Labour markets, Monetary policy framework, Regional economic developments JEL Code(s): E, E3, E32, E5, E52, F, F4
Bond Funds and Fixed-Income Market Liquidity: A Stress-Testing Approach Technical Report No. 115 Rohan Arora, Guillaume Bédard-Pagé, Guillaume Ouellet Leblanc, Ryan Shotlander This report provides a detailed technical description of a stress test model for investment funds called Ceto. Content Type(s): Staff research, Technical reports Topic(s): Economic models, Financial institutions, Financial markets, Financial stability JEL Code(s): G, G1, G12, G14, G2, G20, G23