Menu Costs, Relative Prices, and Inflation: Evidence for Canada Staff Working Paper 1997-14 Robert Amano, Tiff Macklem The menu-cost models of price adjustment developed by Ball and Mankiw (1994;1995) predict that short-run movements in inflation should be positively related to the skewness and the variance of the distribution of disaggregated relative-price shocks in each period. We test these predictions on Canadian data using the distribution of changes in disaggregated producer prices to measure the skewness and standard deviation of relative-price shocks. Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation and prices, Monetary policy framework JEL Code(s): C, C5, C52, E, E3, E31
Real Exchange Rate Persistence in Dynamic General-Equilibrium Sticky-Price Models: An Analytical Characterization Staff Working Paper 2003-35 Hafedh Bouakez This paper assesses analytically the ability of dynamic general-equilibrium sticky-price models to generate persistent real exchange rate fluctuations. It develops a tractable general-equilibrium model with Calvo-type price stickiness. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Exchange rates, International topics JEL Code(s): F, F3, F31, F4, F41
Optimal Interbank Regulation Staff Working Paper 2017-48 Thomas J. Carter Recent years have seen renewed interest in the regulation of interbank markets. A review of the literature in this area identifies two gaps: first, the literature has tended to make ad hoc assumptions about the interbank contract space, which makes it difficult to generate convincing policy prescriptions; second, the literature has tended to focus on ex-post interventions that kick in only after an interbank disruption has come underway (e.g., open-market operations, lender-of-last-resort interventions, bail-outs), rather than ex-ante prudential policies. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial stability, Financial system regulation and policies JEL Code(s): G, G0, G01, G2, G20
Nowcasting Canadian GDP with Density Combinations Staff Discussion Paper 2022-12 Tony Chernis, Taylor Webley We present a tool for creating density nowcasts for Canadian real GDP growth. We demonstrate that the combined densities are a reliable and accurate tool for assessing the state of the economy and risks to the outlook. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Econometric and statistical methods JEL Code(s): C, C5, C52, C53, E, E3, E7
Are Sunspots Learnable? An Experimental Investigation in a Simple General-Equilibrium Model Staff Working Paper 2013-14 Jasmina Arifovic, George Evans, Olena Kostyshyna We conduct experiments with human subjects in a model with a positive production externality in which productivity is a non-decreasing function of the average level of employment of other firms. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models JEL Code(s): D, D8, D83, G, G2, G20
The Bank of Canada’s “Horse Race” of Alternative Monetary Policy Frameworks: Some Interim Results from Model Simulations Staff Discussion Paper 2021-13 José Dorich, Rhys R. Mendes, Yang Zhang Bank of Canada staff are running a “horse race” of alternative monetary policy frameworks in the lead-up to 2021 renewal of the Bank’s monetary policy framework. This paper summarizes some interim results of model simulations from their research. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Central bank research, Economic models, Inflation targets, Monetary policy, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E2, E27, E3, E4, E5, E52, E58
Quantitative Easing in a Small Open Economy: An International Portfolio Balancing Approach Staff Working Paper 2016-55 Serdar Kabaca This paper studies the effects of quantitative easing (QE) in a small open economy dynamic stochastic general-equilibrium model with international portfolio balancing. Portfolios are classified as imperfectly substitutable short-term and long-term subportfolios, each including domestic and foreign bonds. Content Type(s): Staff research, Staff working papers Research Topic(s): International topics, Monetary policy transmission JEL Code(s): E, E5, E52, F, F4, F41
Canadian Financial Stress and Macroeconomic Conditions Staff Discussion Paper 2020-4 Thibaut Duprey Severe disruptions in the financial markets, as observed during the 2008 global financial crisis or the COVID-19 pandemic, can impair the stability of the entire financial system and worsen macroeconomic downturns. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Central bank research, Coronavirus disease (COVID-19), Financial markets, Financial stability, Monetary and financial indicators JEL Code(s): C, C3, C32, E, E4, E44, G, G0, G01
February 17, 2011 Competition in the Canadian Mortgage Market Bank of Canada Review - Winter 2010-2011 Jason Allen This article begins with a brief examination of the Canadian mortgage market, focusing on the market’s evolution following changes to the Bank Act in 1992, which allowed chartered banks to enter the trust business, and the subsequent entrance of virtual banks and mortgage brokers. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Interest rates, Market structure and pricing, Monetary policy transmission