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2192 Results

What People Believe About Monetary Finance and What We Can(’t) Do About It: Evidence from a Large-Scale, Multi-Country Survey Experiment

Staff working paper 2023-36 Cars Hommes, Julien Pinter, Isabelle Salle
We conduct a large-scale survey to shed light on what people believe about public finance. An experiment demonstrates that central bank communication can persistently shift views on monetary financing. It further suggests that views on monetary financing impact support for fiscal discipline.

On-the-run Premia, Settlement Fails, and Central Bank Access

Staff working paper 2025-19 Fabienne Schneider
The premium on “on-the-run” Treasuries is an anomaly. I explain it using a model in which primary dealers hold inventories of Treasuries. I use the model to analyze the effects of granting access to central bank facilities.

Hedge funds and bond market liquidity dynamics at the onset of the 2026 Middle East conflict

Staff analytical paper 2026-42 Vincent Meh, Jabir Sandhu, Andreas Uthemann
We investigate whether hedge funds contributed to Government of Canada bond market illiquidity at the onset of the Middle East war in early 2026. We find no evidence they did. Hedge funds remained active in primary auctions, while their secondary market trading remained broadly consistent with their usual relative-value strategies.

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

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.
November 17, 2016

Commodity Price Supercycles: What Are They and What Lies Ahead?

Because commodity prices help determine Canada’s terms of trade, employment, income and, ultimately, inflation, it is important to understand what causes them to fluctuate. Since the early 1900s, there have been four commodity price supercycles—which we define as extended periods of boom and bust that can take decades to complete. Now in its downswing phase, the current supercycle started after growth in China and other emerging-market economies in the mid-1990s resulted in an unexpected demand shock. The extent of this downswing depends on numerous factors that are presently uncertain.
Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): C, C1, Q, Q1, Q4, Q41
November 13, 1998

Currency crises and fixed exchange rates in the 1990s: A review

Currency crises in the 1990s, especially those in emerging markets, have sharply disrupted economic activity, affecting not only the country experiencing the crisis, but also those with trade, investment, and geographic links. The authors review the theoretical literature and empirical evidence regarding these crises. They conclude that their primary cause is a fixed nominal exchange rate combined with macroeconomic imbalances, such as current account or fiscal deficits, that the market perceives as unsustainable at the prevailing real exchange rate. They also conclude that currency crises can be prevented through the adoption of sound monetary and fiscal policies, effective regulation and supervision of the financial sector, and a more flexible nominal exchange rate.
May 13, 2014

Measuring Uncertainty in Monetary Policy Using Realized and Implied Volatility

Uncertainty surrounding the Bank of Canada’s future policy rates is measured using implied volatility computed from interest rate options and realized volatility computed from intraday prices of interest rate futures. Both volatility measures show that uncertainty decreased following major policy actions taken by the Bank in response to the 2007–09 financial crisis. Findings also indicate that, on average, uncertainty decreases following the Bank’s policy rate announcements.
Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): E, E5, E52, E58
November 19, 2015

A Survey of Consumer Expectations for Canada

The Bank of Canada recently launched a quarterly survey to measure the expectations of Canadian households: the Canadian Survey of Consumer Expectations (CSCE). The data collected provide comprehensive information about consumer expectations for and uncertainty about inflation, the labour market and household finance. This article describes the CSCE and illustrates its potential to offer rich information about Canadian consumers for researchers and policy-makers.
Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): D, D1, D12, D8, D84, E, E3, E31, E5, E52, J, J0

Exchange Rates, Retailers, and Importing: Theory and Firm-Level Evidence

Staff working paper 2019-34 Alex Chernoff, Patrick Alexander
We develop a model with firm heterogeneity in importing and cross-border shopping among consumers. Exchange-rate appreciations lower the cost of imported goods, but also lead to more cross-border shopping; hence, the net impact on aggregate retail prices and sales is ambiguous.
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