Pocket Banks and Out-of-Pocket Losses: Links between Corruption and Contagion Staff Working Paper 2005-23 Raphael Solomon The author describes a model with a corrupt banking system, in which bankers knowingly lend at market interest rates to back projects riskier than the market rate indicates. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial stability JEL Code(s): D, D8, D82, G, G1, G19, G2, G21
Downward Nominal Wage Rigidity in Canada: Evidence Against a “Greasing Effect” Staff Working Paper 2017-31 Joel Wagner The existence of downward nominal wage rigidity (DNWR) has often been used to justify a positive inflation target. It is traditionally assumed that positive inflation could “grease the wheels” of the labour market by putting downward pressure on real wages, easing labour market adjustments during a recession. Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation targets, Labour markets JEL Code(s): E, E2, E24, E5, E52
June 22, 2011 Emerging from the Shadows: Market-Based Financing in Canada Financial System Review - June 2011 James Chapman, Lawrence L. Schembri, Stéphane Lavoie Content Type(s): Publications, Financial System Review articles
Heterogeneity in the Dynamic Effects of Uncertainty on Investment Staff Working Paper 2015-34 Sungje Byun, Soojin Jo How does aggregate profit uncertainty influence investment activity at the firm level? We propose a parsimonious adaptation of a factor-autoregressive conditional heteroscedasticity model to exploit information in a subindustry sales panel for an efficient and tractable estimation of aggregate volatility. Content Type(s): Staff research, Staff working papers Research Topic(s): Domestic demand and components, Econometric and statistical methods, International topics JEL Code(s): C, C2, C22, C23, D, D8, D80, E, E2, E22
A Model of Tiered Settlement Networks Staff Working Paper 2008-12 James Chapman, Jonathan Chiu, Miguel Molico This paper develops a model of settlement system to study the endogenous structure of settlement networks, and the welfare consequences of clearing agent failure. The equilibrium degree of tiering is endogenously determined by the cost structure and the information structure. Content Type(s): Staff research, Staff working papers Research Topic(s): Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E58, G, G2, G21
Markups in Canada: Have They Changed and Why? Staff Working Paper 2008-7 Danny Leung Many empirical studies have examined the cyclical nature of the markup ratio. Until recently, few have attempted to ascertain the changes in the markup over a longer time horizon. Content Type(s): Staff research, Staff working papers Research Topic(s): Econometric and statistical methods JEL Code(s): E, E3, E31, F, F4, F41, L, L1, L11
December 17, 2000 Dynamic General-Equilibrium Models and Why the Bank of Canada is Interested in Them Bank of Canada Review - Winter 2000-2001 Kevin Moran Dynamic general-equilibrium models (DGEMs) are being increasingly used in macroeconomic research. In this article, the author describes the main features of these models and outlines their contribution to economic research performed at the Bank of Canada. He notes that the basic principle of DGEMs is that the modelling of economic activity, even on a scale as large as the economy of a country, should start with a series of microeconomic problems (at the scale of individuals), which, once resolved, are aggregated to represent the macroeconomic reality described by the model. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Economic models
December 23, 2003 Financial System Review - December 2003 This section of the Financial System Review examines the recent performance of the Canadian financial system and the factors, both domestic and international, that are influencing it. Content Type(s): Publications, Financial Stability Report
April 7, 2009 Price-Level Uncertainty, Price-Level Targeting, and Nominal Debt Contracts Bank of Canada Review - Spring 2009 Allan Crawford, Césaire Meh, Yaz Terajima Many central banks around the world have embraced inflation targeting as a monetary policy framework. Interest is growing, however, in price-level targeting as an alternative. The choice of frameworks has important consequences for financial contracts, most of which are not fully indexed to the price level. Changes in the price level therefore lead to changes in the real value of contracts. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Inflation targets, Inflation: costs and benefits, Monetary policy framework
The Information Content of Interest Rate Futures Options Staff Working Paper 1999-15 Des Mc Manus Options prices are being increasingly employed to extract market expectations and views about monetary policy. In this paper, eurodollar options are monitored to examine the evolution of market sentiment over the possible future values of eurodollar rates. Risk-neutral probability functions are employed to synopsize the information contained in the prices of euro/dollar futures options. Several […] Content Type(s): Staff research, Staff working papers Research Topic(s): Financial markets, Interest rates JEL Code(s): G, G1, G14