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3032 Results

Search Frictions and Asset Price Volatility

Staff Working Paper 2010-1 B. Ravikumar, Enchuan Shao
We examine the quantitative effect of search frictions in product markets on asset price volatility. We combine several features from Shi (1997) and Lagos and Wright (2002) in a model without money. Households prefer special goods and general goods.
Content Type(s): Staff research, Staff working papers Research Topic(s): Financial markets, Market structure and pricing JEL Code(s): E, E4, E44, G, G1, G12

Comparison of Auction Formats in Canadian Government Auctions

Staff Working Paper 2009-5 Olivier Armantier, Nourredine Lafhel
Using a rich sample of Canadian government securities auctions, we estimate the structural parameters of a share-auction model accounting for asymmetries across bidders. We find little evidence of asymmetries between participants at Canadian government nominal bond auctions.
February 23, 2012

Household Insolvency in Canada

With increasing levels of household debt in recent years, the number of households that may be vulnerable to a negative economic shock is rising as well. Decisions made by both the debtor and the creditor can contribute to insolvency. This article presents some stylized facts about insolvency in Canada’s household sector and analyzes the role of creditors in insolvencies. The average debt of an individual filing for bankruptcy is more than 1.5 times that of an average Canadian household; bankruptcy filers tend to be unemployed or in low-wage jobs, and are typically renters. The article reports that banks that approve more loans per branch, which is interpreted as less-intensive use of soft information (such as the loan officer’s assessment of the applicant’s character), experience more client bankruptcies. This finding has important policy implications, because financial institutions that do not use soft information risk further deterioration in their lending portfolios.
Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Financial institutions, Financial services JEL Code(s): D, D4, G, G2

Complex Ownership and Capital Structure

Staff Working Paper 2009-12 Teodora Paligorova, Zhaoxia Xu
This paper investigates the impact of pyramid ownership structure and multiple controlling shareholders on firm leverage. Pyramids, having at least one controlling shareholder and a subsidiary, rely significantly more on debt financing than non-pyramid firms.
Content Type(s): Staff research, Staff working papers Research Topic(s): Financial markets, International topics JEL Code(s): G, G3, G31, G32

The Threat of Counterfeiting in Competitive Search Equilibrium

Staff Working Paper 2013-22 Enchuan Shao
Recent studies in monetary theory show that if buyers can use lotteries to signal the quality of bank notes, counterfeiting does not occur in a pooling equilibrium. In this paper, I investigate the robustness of this non-existence result by considering an alternative trading mechanism.
Content Type(s): Staff research, Staff working papers Research Topic(s): Bank notes JEL Code(s): D, D8, D82, D83, E, E4, E42

Rediscounting Under Aggregate Risk with Moral Hazard

Staff Working Paper 2007-51 James Chapman, Antoine Martin
Freeman (1999) proposes a model in which discount window lending and open market operations have different effects. This is important because in most of the literature, these policies are indistinguishable.

The Zero Bound on Nominal Interest Rates: Implications for the Optimal Monetary Policy in Canada

Staff Discussion Paper 2007-1 Claude Lavoie, Hope Pioro
The authors assess the performance of the Canadian economy under a variety of interest rate rules when the zero bound on nominal interest rates can bind. Their assessment is based on numerical simulations of a dynamic stochastic general-equilibrium model in a stochastic environment. Consistent with the literature, the authors find that the probability and consequences […]
November 16, 2017

Bank of Canada Review - Autumn 2017

Is shale oil production in the United States a factor in the 2014 oil price decline? Which methods of payment are commonly accepted by merchants in Canada? Bank researchers share their insights on these topics. They also provide an update on the neutral rate of interest as well as on changes to the Bank’s operational framework for market operations.

Comparing Forward Guidance and Neo-Fisherianism as Strategies for Escaping Liquidity Traps

Staff Analytical Note 2016-16 Robert Amano, Thomas J. Carter, Rhys R. Mendes
What path should policy-makers select for the nominal rate when faced with a liquidity trap during which the effective lower bound binds?
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