Foreign Exchange Interventions: The Long and the Short of It Staff working paper 2022-25 Patrick Alexander, Sami Alpanda, Serdar Kabaca This paper studies the effects of foreign exchange (FX) interventions in a two-region model where governments issue both short- and long-term bonds. We find that the term premium channel dominates the trade balance channel in our calibrated model. As a result, the conventional beggar-thy-neighbor effects of interventions are overturned. Content Type(s): Staff research, Staff working papers JEL Code(s): F, F3, F31, F33, F4, F41 Research Theme(s): Financial markets and funds management, Funds management, International markets and currencies, Models and tools, Economic models
Centralizing Over-the-Counter Markets? Staff working paper 2021-39 Jason Allen, Milena Wittwer Would a shift in trading in fixed-income markets—from over the counter (bilateral trading) to a centralized electronic platform—improve welfare? We use trade-level data on the secondary market for Government of Canada debt to answer this question. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D4, D40, D47, G, G1, G10, G2, G20, L, L1, L10 Research Theme(s): Financial markets and funds management, Market functioning, Market structure, Financial system, Financial institutions and intermediation
Decomposing Large Banks’ Systemic Trading Losses Staff working paper 2024-6 Radoslav Raykov Do banks realize simultaneous trading losses because they invest in the same assets, or because different assets are subject to the same macro shocks? This paper decomposes the comovements of bank trading losses into two orthogonal channels: portfolio overlap and common shocks. Content Type(s): Staff research, Staff working papers JEL Code(s): G, G1, G10, G11, G2, G20 Research Theme(s): Financial markets and funds management, Market functioning, Financial system, Financial institutions and intermediation, Financial stability and systemic risk
Risk Amplification Macro Model (RAMM) Technical report No. 123 Kerem Tuzcuoglu The Risk Amplification Macro Model (RAMM) is a new nonlinear two-country dynamic model that captures rare but severe adverse shocks. The RAMM can be used to assess the financial stability implications of both domestic and foreign-originated risk scenarios. Content Type(s): Staff research, Technical reports JEL Code(s): C, C5, C51, E, E3, E37, E4, E44, F, F4, F44 Research Theme(s): Financial system, Financial stability and systemic risk, Models and tools, Economic models, Monetary policy, Real economy and forecasting
Evolving Temperature Dynamics in Canada: Preliminary Evidence Based on 60 Years of Data Staff working paper 2021-22 Robert Amano, Marc-André Gosselin, Julien McDonald-Guimond Are summers getting hotter? Do daily temperatures change more than they used to? Using daily Canadian temperature data from 1960 to 2020 and modern econometric methods, we provide economists and policy-makers evidence on the important climate change issue of evolving temperatures. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C2, C22, Q, Q5, Q54 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Structural challenges, Climate change
Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform Staff working paper 2021-15 Gabriela Galassi How do firms change their employment decisions when tax benefits for low-earning workers are expanded? Some firms increase employment overall, whereas others replace high-earning workers with low-earning workers, according to German linked employer-employee data. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E24, E6, E64, H, H2, H20, H24, H3, H32, I, I3, I38, J, J2, J23, J3, J38 Research Theme(s): Models and tools, Economic models, Monetary policy, Real economy and forecasting, Structural challenges, Demographics and labour supply
Examining recent revisions to CPI-common Staff analytical note 2022-15 Elyse Sullivan Unusually large revisions to CPI-common in recent months stem from increased common movements across consumer price index components amid broad inflationary pressures. With recent revisions, CPI-common is more closely aligned with the Bank of Canada’s other two preferred measures of core inflation. However, caution is necessary when interpreting real-time estimates of CPI-common in the current environment. Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C1, C13, C18, E, E3, E31 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures
Merchant Access to Cash: Going the Extra Kilometer? Staff analytical paper 2026-41 Angelika Welte, Stephen Wild, Patrick Fogaing kouamo In this study, we measure SMBs’ access to cash using the driving distance to financial institution (FI) branches. First, we measure the distance between SMBs and the nearest FI branch. Second, we use a sample of 651 SMBs from the 2023 Merchant Acceptance Survey to examine SMBs’ banking choices. Content Type(s): Staff research, Staff analytical paper JEL Code(s): D, D8, D83, E, E4, E41 Research Theme(s): Money and payments, Cash and bank notes, Retail payments
Decentralized finance: Innovations and challenges Staff analytical note 2023-15 Jonathan Chiu, Hanna Yu Decentralized finance surged in popularity around 2020. We explore its value and limitations and highlight some potential regulatory concerns. Content Type(s): Staff research, Staff analytical notes JEL Code(s): G, G1, G2 Research Theme(s): Financial system, Financial stability and systemic risk, Money and payments, Digital assets and fintech, Payment and financial market infrastructures
Assessing the Predictive Ability of Sovereign Default Risk on Exchange Rate Returns Staff working paper 2017-19 Claudia Foroni, Francesco Ravazzolo, Barbara Sadaba Increased sovereign credit risk is often associated with sharp currency movements. Therefore, expectations of the probability of a sovereign default event can convey important information regarding future movements of exchange rates. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C2, C22, C5, C52, C53, F, F3, F31 Research Theme(s): Financial markets and funds management, International markets and currencies, Models and tools, Econometric, statistical and computational methods