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3028 Results

Price Competition and Concentration in Search and Negotiation Markets: Evidence from Mortgage Lending

Staff Working Paper 2012-4 Jason Allen, Robert Clark, Jean-François Houde
This paper examines the impact of bank consolidation on mortgage rates in order to evaluate the extent to which mortgage markets are competitive. Mortgage markets are decentralized and so rates are determined through a search and negotiation process.
Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial services, Interest rates JEL Code(s): G, G2, L, L1
August 17, 2001

The Changing Effects of Energy-Price Shocks on Economic Activity and Inflation

In this article the author examines the effects that major changes in energy prices in recent years have had on inflation and on the pace of economic expansion. These are then compared with the effects of the oil-price shocks that occurred in the 1970s and early 1980s. Changes in the intensity of energy use are examined, as well as developments in Canada's merchandise trade surplus in energy commodities and products. The author also considers the effects that a monetary policy anchored to low and stable inflation could have on price-setting behaviour and thus on the pass-through of higher energy costs to core inflation in Canada and in other industrial countries.

Equity Option-Implied Probability of Default and Equity Recovery Rate

Staff Working Paper 2016-58 Bo Young Chang, Greg Orosi
There is a close link between prices of equity options and the default probability of a firm. We show that in the presence of positive expected equity recovery, standard methods that assume zero equity recovery at default misestimate the option-implied default probability.

Demand-Driven Risk Premia in Foreign Exchange and Bond Markets

Staff Working Paper 2025-29 Ingomar Krohn, Andreas Uthemann, Rishi Vala, Jun Yang
We show how Treasury demand shocks transmit to foreign exchange and bond markets globally. Higher Treasury demand weakens the U.S. dollar and raises foreign bond prices, with effects persisting for two weeks. The transmission varies predictably across countries based on their monetary policy alignment with the United States.

Cash and COVID-19: The impact of the second wave in Canada

The COVID-19 pandemic significantly increased the demand for cash. Cash in circulation increased sharply from March through December 2020, particularly in the early months of this period. Although use of electronic methods of payment also increased significantly, cash use for payments remains high for low-value transactions and among certain demographic groups.

The Market for Acquiring Card Payments from Small and Medium-Sized Canadian Merchants

Staff Discussion Paper 2020-5 Angelika Welte, Jozsef Molnar
This note uses industry data and a unique dataset of small and medium-sized merchants to provide insights into the acquirer-merchant market in Canada.
August 16, 2012

Measurement Bias in the Canadian Consumer Price Index: An Update

The consumer price index (CPI) is the most commonly used measure to track changes in the overall level of prices. Since it departs from a true cost-of-living index, the CPI is subject to four types of measurement bias—commodity substitution, outlet substitution, new goods and quality adjustment. The author updates previous Bank of Canada estimates of measurement bias in the Canadian CPI by examining these four sources of potential bias. He finds the total measurement bias over the 2005–11 period to be about 0.5 percentage point per year, consistent with the Bank’s earlier findings. Slightly more than half of this bias is caused by the fixed nature of the CPI basket of goods and services.
Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Inflation and prices, Inflation targets JEL Code(s): E, E3, E31, E5, E52

The Role of Beliefs in Entering and Exiting the Bitcoin Market

We develop a model that links investors’ decisions to enter or exit the Bitcoin market with their beliefs about the survival of Bitcoin. Empirical testing using Canadian data reveals that beliefs strongly influence both entries and exits, and this impact varies with time and ownership status.

The Role of Central Banks in Promoting Financial Stability: An International Perspective

Staff Discussion Paper 2016-15 Rose Cunningham, Christian Friedrich
The 2007–09 global financial crisis has led policy-makers around the world, including central banks, to refocus their efforts to promote financial stability. As part of this process, central banks became quite active in supporting financial stability in a variety of ways, such as publicly sharing their assessments of financial system vulnerabilities and risks and helping to strengthen regulation, supervision and macroprudential measures.
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