The contribution of firm profits to the recent rise in inflation Staff analytical note 2023-12 Panagiotis Bouras, Christian Bustamante, Xing Guo, Jacob Short We measure the contribution to inflation from the growth in markups of Canadian firms. The dynamics of inflation and markups suggest that changes in markups could account for less than one-tenth of inflation in 2021. Further, they suggest that peak inflation was driven primarily by changes in the costs of firms. Content Type(s): Staff research, Staff analytical notes JEL Code(s): D, D2, D22, D4, E, E3, E31, L, L1, L11 Research Theme(s): Financial markets and funds management, Market functioning, Monetary policy, Inflation dynamics and pressures
May 16, 2016 Estimating Canada’s Effective Lower Bound Bank of Canada Review - Spring 2016 Jonathan Witmer, Jing Yang Recently, the Bank of Canada has estimated the effective lower bound (ELB) on its policy interest rate to be about -50 basis points. This article outlines the analysis that underpins that estimate by quantifying the costs of storing and using cash in Canada. It also explores how some international markets have adapted to negative interest rates, issues surrounding their implementation, as well as their transmission to other interest rates in the economy. Finally, it discusses theoretical ideas on how the ELB could be reduced further. Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): D, D5, D53, E, E4, E43, E5, E52, E58
Markups and Inflation in Oligopolistic Markets: Evidence from Wholesale Price Data Staff working paper 2024-20 Patrick Alexander, Lu Han, Oleksiy Kryvtsov, Ben Tomlin We study how the interaction of market power and nominal price rigidity influences inflation dynamics. We find that pass-through declines with price stickiness when markets are concentrated, which implies a lower slope of the New Keynesian Phillips curve. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D4, D43, E, E3, E31, L, L1, L13, L8, L81 Research Theme(s): Financial markets and funds management, Market structure, Monetary policy, Inflation dynamics and pressures
Forecasting Recessions in Canada: An Autoregressive Probit Model Approach Staff working paper 2024-10 Antoine Poulin-Moore, Kerem Tuzcuoglu We forecast recessions in Canada using an autoregressive (AR) probit model. The results highlight the short-term predictive power of the US economic activity and suggest that financial indicators are reliable predictors of Canadian recessions. In addition, the suggested model meaningfully improves the ability to forecast Canadian recessions, relative to a variety of probit models proposed in the Canadian literature. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C5, C51, C53, E, E3, E32 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Real economy and forecasting
How changes in the share of constrained households affect the effectiveness of monetary policy Staff analytical note 2024-3 Felipe Alves, Sushant Acharya We measure how the change in the share of constrained households in Canada following the COVID-19 recession has impacted the effectiveness of monetary policy. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E2, E21, E4, E40, E5, E50 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission
What Can Stockouts Tell Us About Inflation? Evidence from Online Micro Data Staff working paper 2021-52 Alberto Cavallo, Oleksiy Kryvtsov Did supply disruptions and cost pressures play a role in rising inflation in 2020 during the COVID-19 pandemic? Using data collected from websites of large retailers in multiple sectors and countries, we show that shortages may indicate transitory inflationary pressures. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D2, D22, E, E3, E31, E37 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Assessing the US and Canadian neutral rates: 2026 update Staff analytical paper 2026-21 Felipe Alves, William Beaudoin, Hélène Desgagnés, Wei Dong, Jan David Schneider, Eugene Trostin, Argyn Toktamyssov, Hannes Twieling We assess the Canadian nominal neutral rate to be in the range of 2.25% to 3.25%, unchanged from our assessment in 2025. We assess the US nominal neutral rate to be in the range of 2.50% to 3.50%, somewhat higher than the range of 2.25% to 3.25% reported in the 2025 assessment. Content Type(s): Staff research, Staff analytical paper JEL Code(s): E, E4, E43, E5, E52 Research Theme(s): Monetary policy, Monetary policy framework and transmission
Quantum Monte Carlo for Economics: Stress Testing and Macroeconomic Deep Learning Staff working paper 2022-29 Vladimir Skavysh, Sofia Priazhkina, Diego Guala, Thomas Bromley Using the quantum Monte Carlo algorithm, we study whether quantum computing can improve the run time of economic applications and challenges in doing so. We apply the algorithm to two models: a stress testing bank model and a DSGE model solved with deep learning. We also present innovations in the algorithm and benchmark it to classical Monte Carlo. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C1, C15, C6, C61, C63, C68, C7, E, E1, E13, G, G1, G17, G2, G21 Research Theme(s): Financial system, Financial stability and systemic risk, Models and tools, Econometric, statistical and computational methods, Economic models
February 5, 2026 Structural change—Canada at a crossroads Remarks Tiff Macklem Empire Club of Canada Toronto, Ontario Governor Tiff Macklem discusses how structural change—driven by U.S. protectionism, AI, and slowing population growth—is reshaping Canada’s economy. He outlines the Bank’s role in maintaining low and stable inflation while helping the economy through the transition. Content Type(s): Press, Speeches and appearances, Remarks Subject(s): Monetary policy, Economy/Economic growth, Inflation
October 3, 2023 Understanding the unusual: How firms set prices during periods of high inflation Remarks Nicolas Vincent Chamber of Commerce of Metropolitan Montreal Montréal, Quebec Deputy Governor Nicolas Vincent discusses how firms set their prices and how pricing behaviour changed in our recent environment of high inflation. Content Type(s): Press, Speeches and appearances, Remarks Subject(s): Monetary policy, Economic models, Economy/Economic growth, Inflation, Inflation targeting framework