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This report presents the details of a new semi-annual survey that will improve the Bank of Canada’s surveillance across the financial system and deepen efforts to engage with financial system participants. The survey collects expert opinions on the risks to and resilience of the Canadian financial system as well as on emerging trends and financial innovations. The report presents an overview of the survey and provides high-level results from the spring 2018 survey.

We develop a finite-sample procedure to test the beta-pricing representation of linear factor pricing models that is applicable even if the number of test assets is greater than the length of the time series. Our distribution-free framework leaves open the possibility of unknown forms of non-normalities, heteroskedasticity, time-varying correlations, and even outliers in the asset returns.

Payments systems operate virtually unnoticed in our daily lives and yet are crucial to a wellfunctioning economy and financial system.

Using a novel data set for 17 countries dating from 1900 to 2013, we characterize business cycles in both small developed and developing countries in a model with financial frictions and a common shock structure. We estimate the model jointly for these 17 countries using Bayesian methods.

The turmoil in global financial markets entered a new phase in September, moving to a more acute and broad-based loss of confidence in the context of a series of failures and near-failures of large financial institutions in the United States and Europe.

FSR Highlights - December 2008

Senior Deputy Governor Carolyn A. Wilkins discusses technological progress and how policy-makers can harness it for economic growth that benefits everyone.

Consumers’ perceptions of current inflation remain elevated and are diverging from actual inflation. Perceptions of high inflation are also leading to persistently high expectations for inflation over the next 12 months. Consumers’ expectations for interest rates one year from now also remain high, and many consumers believe that the impacts of higher interest rates on their household spending are far from over. Homeowners with a variable-rate mortgage are more likely than other consumers to report being worse off due to high interest rates. Consumers’ plans to purchase services, such as vacations or concerts, are more widespread than plans to make major purchases of goods that are likely to be financed with loans, such as vehicles or appliances. Workers are reporting signs of job market cooling, such as more time spent looking for a new job, but they remain confident about the labour market.

During downturns, workers get stuck in low-productivity jobs and wages remain stagnant. I build an heterogenous agent incomplete market model with a full job ladder that accounts for these facts. An adverse financial shock calibrated to the US Great Recession replicates the period’s slow recovery and missing disinflation.

The prices of commodities produced in Canada have important implications for the performance of the Canadian economy and the conduct of monetary policy. The authors explain an important change to the methodology used to construct the Bank of Canada commodity price index (BCPI).

Online shopping is often guided by search platforms. Consumers type keywords into query boxes, and search platforms deliver a list of products. Consumers' attention is limited, and exhaustive searches are often impractical.