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3045 Results

A Horse Race of Monetary Policy Regimes: An Experimental Investigation

Staff Working Paper 2022-33 Olena Kostyshyna, Luba Petersen, Jing Yang
How should central banks design monetary policy in stable times and during recessions? We run a horse race between five monetary policy frameworks in an experimental laboratory to assess how well the different approaches can manage the public’s expectations and stabilize the economy.

To Link or Not To Link? Netting and Exposures Between Central Counterparties

This paper provides a framework to compare linked and unlinked CCP configurations in terms of total netting achieved by market participants and the total system default exposures that exist between participants and CCPs.
Content Type(s): Staff research, Staff working papers Research Topic(s): Payment clearing and settlement systems JEL Code(s): G, G1, G18, G2, G23

Adopting Price-Level Targeting under Imperfect Credibility: An Update

Staff Working Paper 2008-37 Oleksiy Kryvtsov, Malik Shukayev, Alexander Ueberfeldt
This paper measures the welfare gains of switching from inflation-targeting to price-level targeting under imperfect credibility. Vestin (2006) shows that when the monetary authority cannot commit to future policy, price-level targeting yields higher welfare than inflation targeting.
Content Type(s): Staff research, Staff working papers Research Topic(s): Credibility, Monetary policy framework JEL Code(s): E, E3, E31, E5, E52

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 Research Topic(s): Economic models, Interest rates, Monetary policy JEL Code(s): E, E4, E40, E43, E5, E50, E52, E58, F, F4, F41

Resilience of bank liquidity ratios in the presence of a central bank digital currency

Staff Analytical Note 2022-5 Alissa Gorelova, Bena Lands, Maria teNyenhuis
Could Canadian banks continue to meet their regulatory liquidity requirements after the introduction of a cash-like retail central bank digital currency (CBDC)? We conduct a hypothetical exercise to estimate how a CBDC could affect bank liquidity by increasing the run-off rates of transactional retail deposits under four increasingly severe scenarios.
May 11, 2017

The Life Cycle of Government of Canada Bonds in Core Funding Markets

Data on the use of government securities in the repo, securities lending and cash markets suggest there are bond market clienteles in Canada. Shorter-term bonds are more prevalent in the repo market, while longer-maturity securities are more active in the securities lending market—consistent with the preferred habitat hypothesis. These results could help design better debt-management strategies and more-effective policies to maintain well-functioning financial markets.
Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Debt management, Financial markets JEL Code(s): G, G1, G12, G2, G23

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 Research Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): E, E2, E20, E22, E3, E32, G, G3, G31, G32

A Macroeconomic Model of an Epidemic with Silent Transmission and Endogenous Self-isolation

Staff Working Paper 2020-50 Antonio Diez de los Rios
We study the interaction between epidemics and economic decisions in a model that has silent transmission of the virus. We find that rational behaviour strongly diminishes the severity of the epidemic but worsens the economic recession. We also find that the detection and isolation of not only symptomatic individuals but also those who are infected and asymptomatic or mildly symptomatic can reduce the severity of the recession caused by the pandemic.
Content Type(s): Staff research, Staff working papers Research Topic(s): Coronavirus disease (COVID-19), Economic models JEL Code(s): E, E1, H, H0, I, I1
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