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We identify two channels that affect the relationship between inflation and unemployment. First, inflation lowers wages because unemployed suffer more from inflation than employed, generating a positive relationship. Second, inflation increases firms’ financing costs, generating a negative relationship. Improvements in firm financing conditions can induce the relationship to switch signs.

How might one simulate a million realistic income paths and compute their statistical moments in under a second? Using CUDA-based methods to estimate the Canadian earnings process, I find that the distribution of labour income growth is sharply peaked with heavy tails—similar to that in the United States.

Previously reported effects of institutional quality and political risks on foreign direct investment (FDI) are mixed and, therefore, difficult to interpret. We present empirical evidence suggesting a relatively clear, statistically robust, and intuitive characterization.

How can macroprudential policy and monetary policy stabilize segmented credit markets? Is there a trade-off between financial stability and price stability? I use a theoretical model to evaluate the performance of alternative policies and find the optimal mix of macroprudential and monetary policy in response to aggregate shocks.

Time-varying capital buffer requirements are a powerful tool that allow bank regulators to avoid severe financial stress without the cost of imposing very high levels of capital. However, this tool is only effective if banks understand how it is used. I present a model that banks and financial market participants can use to anticipate how time-varying capital buffer requirements change over time.

The author examines aspects of Canada's trade performance in light of the major trends seen in world trade over the past several decades. Canada has become more integrated with the world economy, and this openness is evident from its greater export orientation, its heavier reliance on imported inputs, and more exposure to foreign competition in its domestic markets. The author analyzes the composition of Canadian trade and the trend towards increasing two-way trade in similar products. He also looks at the increasing integration of trade within regions, which for Canada has meant a greater concentration of exports with the United States.

Governor Mark Carney discusses the factors driving global deleveraging and the implications for economic growth in Canada.

This study uses the COVID-19 travel restrictions to estimate foreign demand for Canadian banknotes. It reveals that international visitors accounted for about 10% of all $100 CAD notes in circulation pre-pandemic, with each visitor carrying an average of $165 in hundred-dollar bills.

This paper examines how market-perceived AI exposure is associated with extreme financial-sector gains and losses across five markets, using Expected Shortfall and skewness decompositions to distinguish AI-sector, macroeconomic, systemic and financial scenarios.