Uninsurable Investment Risks and Capital Income Taxation Staff Working Paper 2009-3 Césaire Meh, Yaz Terajima This paper studies the capital accumulation and welfare implications of reducing capital income taxation in a general equilibrium economy with uninsurable investment risks. Content Type(s): Staff research, Staff working papers Topic(s): Economic models JEL Code(s): E, E2, E21, E22, E6, E62, G, G3, G32, H, H2, H24, H25
Monetary Policy Lag, Zero Lower Bound, and Inflation Targeting Staff Working Paper 2009-2 Shin-Ichi Nishiyama Although the concept of monetary policy lag has historical roots deep in the monetary economics literature, relatively little attention has been paid to the idea. In this paper, we build on Svensson's (1997) inflation targeting framework by explicitly taking into account the lagged effect of monetary policy and characterize the optimal monetary policy reaction function both in the absence and in the presence of the zero lower bound on the nominal interest rate. Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets, Monetary policy framework, Monetary policy implementation JEL Code(s): C, C6, C63, E, E5, E52, E58
The Impact of Market Timing on Canadian and U.S. Firms' Capital Structure Staff Working Paper 2009-1 Zhaoxia Xu This paper studies the impact of market timing on Canadian firms' capital structure and makes a comparison with U.S. firms. Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, International topics JEL Code(s): G, G3, G32
Financial Intermediation, Liquidity and Inflation Staff Working Paper 2008-49 Jonathan Chiu, Césaire Meh This paper develops a search-theoretic model to study the interaction between banking and monetary policy and how this interaction affects the allocation and welfare. Regarding how banking affects the welfare costs of inflation: First, we find that, with banking, inflation generates smaller welfare costs. Content Type(s): Staff research, Staff working papers Topic(s): Monetary policy framework JEL Code(s): E, E4, E40, E5, E50
India and the Global Demand for Commodities: Is There an Elephant in the Room? Staff Discussion Paper 2008-18 Michael Francis, Corinne Luu After 10 years of impressive growth, India is now the fourth largest economy in the world. Yet, to date, India's impact on global commodity markets has been muted. The authors examine how India's domestic and trade policies have distorted and constrained its demand for commodities. Content Type(s): Staff research, Staff discussion papers Topic(s): Development economics, International topics JEL Code(s): F, F1, F14, O, O1, O13, O5, O53
Futures Markets, Oil Prices and the Intertemporal Approach to the Current Account Staff Working Paper 2008-48 Elif Arbatli The intertemporal approach to the current account suggests modeling movements in the current account in a forward-looking, dynamic framework. In this framework, the current account reflects consumption smoothing of agents that lend and borrow from the rest of the world in the face of transitory shocks to income. Content Type(s): Staff research, Staff working papers Topic(s): Balance of payments and components JEL Code(s): C, C2, C22, F, F2, F21, F3, F32, G, G1, G13
How Important Is Liquidity Risk for Sovereign Bond Risk Premia? Evidence from the London Stock Exchange Staff Working Paper 2008-47 Ron Alquist This paper uses the framework of arbitrage-pricing theory to study the relationship between liquidity risk and sovereign bond risk premia. The London Stock Exchange in the late 19th century is an ideal laboratory in which to test the proposition that liquidity risk affects the price of sovereign debt. Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, International topics JEL Code(s): F, F2, F21, F3, F34, F36, G, G1, G12, G15
Indebtedness and the Household Financial Health: An Examination of the Canadian Debt Service Ratio Distribution Staff Working Paper 2008-46 Umar Faruqui The household debt-to-disposable income ratio in Canada increased from 110 per cent in 1999 to 127 per cent in 2007. This increase has raised questions about the ability of households to service their increased debt if faced with a negative economic or socio-economic shock. Content Type(s): Staff research, Staff working papers Topic(s): Financial stability, Monetary and financial indicators JEL Code(s): D, D1, D11, D14, D3, D39
A Survey and Risk Analysis of Selected Non-Bank Retail Payments Systems Staff Discussion Paper 2008-17 Nikil Chande Payment services offered by non-banks have flourished in recent years. The author provides an overview of the different kinds of non-bank retail payments schemes currently available in Canada, illustrating each by focusing on a specific example. Content Type(s): Staff research, Staff discussion papers Topic(s): Financial services, Payment clearing and settlement systems JEL Code(s): D, D1, D14, G, G2, G20
Firm Size and Productivity Staff Working Paper 2008-45 Danny Leung, Césaire Meh, Yaz Terajima This paper examines the relationship between firm size and productivity. In contrast to previous studies, this paper offers evidence of the relationship not only from manufacturing firms, but from non-manufacturing firms as well. Content Type(s): Staff research, Staff working papers Topic(s): Productivity JEL Code(s): L, L1, L11, L2, L25, O, O4, O47