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December 15, 2020

Trading for a sustainable recovery

Remarks (delivered virtually) Tiff Macklem Greater Vancouver Board of Trade Vancouver, British Columbia
Governor Tiff Macklem talks about how important trade is for the economic recovery. He discusses what policymakers and business leaders can do to encourage growth in trade.

Implementing Market-Based Indicators to Monitor Vulnerabilities of Financial Institutions

Staff analytical note 2016-5 Cameron MacDonald, Maarten van Oordt, Robin Scott
This note introduces several market-based indicators and examines how they can further inform the Bank of Canada’s vulnerability assessment of Canadian financial institutions. Market-based indicators of leverage suggest that the solvency risk for major Canadian banks has increased since the beginning of the oil-price correction in the second half of 2014.

Identification and Estimation of Risk Aversion in First-Price Auctions with Unobserved Auction Heterogeneity

Staff working paper 2016-23 Serafin Grundl, Yu Zhu
This paper shows point identification in first-price auction models with risk aversion and unobserved auction heterogeneity by exploiting multiple bids from each auction and variation in the number of bidders. The required exclusion restriction is shown to be consistent with a large class of entry models.

Do hedge funds support liquidity in the Government of Canada bond market?

Staff analytical note 2023-11 Jabir Sandhu, Rishi Vala
While Government of Canada bond transactions of hedge funds are typically in the opposite direction to those of other market participants, during the peak period of market turmoil in March 2020, hedge funds sold these bonds, just as other market participants did. This shows that hedge funds can at times contribute to one-sided markets and amplify declines in market liquidity.

The reliance of Canadians on credit card debt as a predictor of financial stress

Staff analytical note 2024-18 Jia Qi Xiao
I analyze the relationship between carrying a credit card balance and future financial stress. I find that carrying a balance significantly increases the likelihood that credit card holders miss future debt payments. This likelihood tends to rise as credit card balances grow and are held for long periods.

The impact of trading flows on Government of Canada bond prices

Staff analytical note 2025-20 Andreas Uthemann, Rishi Vala, Jun Yang
Trading flows affect Government of Canada bond prices. Our estimates suggest a sale of 1% of the available supply of bonds typically lowers bond prices by 0.2%. From 2000 to 2025, demand from institutional investors, such as Canadian pension funds and foreign investors, explains 69% of quarterly price variation, with the remainder explained by changes in the supply of bonds.

Evaluating the Bank of Canada Staff Economic Projections Using a New Database of Real-Time Data and Forecasts

We present a novel database of real-time data and forecasts from the Bank of Canada’s staff economic projections. We then provide a forecast evaluation for GDP growth and CPI inflation since 1982: we compare the staff forecasts with those from commonly used time-series models estimated with real-time data and with forecasts from other professional forecasters and provide standard bias tests.

The State of Labour Market Churn in Canada

Staff analytical note 2019-4 Olena Kostyshyna, Corinne Luu
The literature highlights that labour market churn, including job-to-job transitions, is a key element of wage growth. Using microdata from the Labour Force Survey, we compute measures of labour market churn and compare these with pre-crisis averages to assess implications for wage growth.

Endogenous Liquidity and Capital Reallocation

Staff working paper 2022-27 Wei Cui, Randall Wright, Yu Zhu
We study economies where firms acquire capital in primary markets then retrade it in secondary markets after information on idiosyncratic productivity arrives. Our secondary markets incorporate bilateral trade with search, bargaining and liquidity frictions.
May 17, 2012

Inflation Targeting: The Recent International Experience

In the years since the 2006 renewal of Canada’s inflation-control agreement, monetary policy regimes have faced significant shocks, including the global economic and financial crisis. This article reviews the recent experience with inflation targeting, including the debate about the appropriate role of monetary policy in maintaining financial stability. In the aftermath of the crisis, both […]
Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): E, E3, E31, E5, E52, E58
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