The Canadian Experience with Weighted Monetary Aggregates Staff Working Paper 1995-10 David Longworth, Joseph Atta-Mensah This paper compares the empirical performance of Canadian weighted monetary aggregates (in particular, Fisher ideal aggregates) with the current summation aggregates, for their information content and forecasting performance in terms of prices, real output and nominal spending for the period 1971Q1 to 1989Q3. The properties of money-demand equations for these aggregates, particularly their temporal stability, […] Content Type(s): Staff research, Staff working papers Research Topic(s): Monetary aggregates
Inequality in Parental Transfers and Optimal Need-Based Financial Aid Staff Working Paper 2019-7 Youngmin Park This paper studies optimal need-based financial aid when parental transfers—unobserved by policymakers—vary across and within families of similar means. Using data on U.S. college students, I document substantial inequality in parental transfers, especially among wealthier families. I then analyze how this affects aid design aimed at reducing inefficiencies from borrowing constraints and the aid itself. Content Type(s): Staff research, Staff working papers Research Topic(s): Fiscal policy, Potential output, Productivity JEL Code(s): D, D1, D14, D6, D61, D64, D8, D82, I, I2, I22, J, J2, J24
The International Experience with Negative Policy Rates Staff Discussion Paper 2015-13 Harriet Jackson A key issue in the renewal of the inflation-control agreement is the question of the appropriate level of the inflation target. Many observers have raised concerns that with the reduction in the neutral rate, and the experience of the recent financial crisis, the effective lower bound (ELB) is more likely to be binding in the future if inflation targets remain at 2 per cent. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Central bank research, Financial markets, International topics, Monetary policy framework JEL Code(s): E, E5, E52, E58, E6, E65
May 13, 2014 Understanding Platform-Based Digital Currencies Bank of Canada Review - Spring 2014 Ben Fung, Hanna Halaburda Given technological advances and the widespread use of the Internet, various digital currencies have emerged. In most cases, Internet platforms such as Facebook and Amazon restrict the functionality of their digital currencies to enhance the business model and maximize their profits. While platform-based digital currencies could increase the efficiency of retail payments, they could also raise some important policy issues if they were to become widely used outside of the platform. Thus, it is important to closely monitor the evolution of these digital currencies. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Bank notes, Digital currencies and fintech, Financial services, Payment clearing and settlement systems JEL Code(s): E, E4, E41, E42
March 11, 2021 COVID-19, savings and household spending Remarks (delivered virtually) Lawrence L. Schembri Restaurants Canada Toronto, Ontario Deputy Governor Lawrence Schembri talks about the Bank’s latest interest rate announcement and discusses how COVID-19 has affected savings and the outlook household spending. Content Type(s): Press, Speeches and appearances, Remarks Research Topic(s): Coronavirus disease (COVID-19), Domestic demand and components, Monetary policy, Recent economic and financial developments, Service sector
June 8, 2017 Using Market-Based Indicators to Assess Banking System Resilience Financial System Review - June 2017 Cameron MacDonald, Maarten van Oordt This report reviews the use of quantitative tools to gauge market participants’ assessment of banking system resilience. These measures complement traditional balance-sheet metrics and suggest that markets consider large Canadian banks to be better placed to weather adverse shocks than banks in other advanced economies. Compared with regulatory capital ratios, however, the measures suggest less improvement in banking system resilience since the pre-crisis period. Content Type(s): Publications, Financial System Review articles Research Topic(s): Financial institutions, Financial markets, Financial stability JEL Code(s): G, G0, G01, G1, G10, G2, G21
Quantifying the Economic Benefits of Payments Modernization: the Case of the Large-Value Payment System Staff Working Paper 2021-64 Neville Arjani, Fuchun Li, Zhentong Lu Canada is undertaking a major initiative to modernize its payments ecosystem. The modernized ecosystem is expected to bring significant benefits to Canadian financial markets and the overall economy. We develop an empirical framework to quantify the economic benefits of modernizing the payment system in Canada. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): C, C3, E, E4, E42, G, G1, G2, G28
Is Money Essential? An Experimental Approach Staff Working Paper 2023-39 Janet Hua Jiang, Peter Norman, Daniela Puzzello, Bruno Sultanum, Randall Wright Monetary theory says that money is essential if it helps to achieve better incentive-feasible outcomes. We test this in the laboratory. Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Economic models JEL Code(s): C, C9, C92, E, E4, E5
The Dealer-to-Client Repo Market: A Buoy on a Swaying Sea Staff Discussion Paper 2025-14 Greg Adams, Evan Dudley, Jean-Sébastien Fontaine, Sofia Tchamova, Andreas Uthemann In 2024, the Canadian Overnight Repo Rate Average (CORRA) rose 7 basis points above the Bank of Canada’s target overnight rate as settlement balances declined and hedge fund borrowing increased by $30 billion, straining dealers’ balance sheets. Exercising market power, dealers raised rates, and as client activity grew, these higher rates increasingly influenced CORRAs deviation from target. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Financial institutions, Financial markets, Interest rates, Market structure and pricing, Monetary policy implementation JEL Code(s): D, D4, D5, D53, E, E4, E43, E44, E5, E52, G, G1, G12
Relative Price Movements and Labour Productivity in Canada: A VAR Analysis Staff Discussion Paper 2010-5 Michael Dolega, David Dupuis, Lise Pichette In recent years, the Canadian economy has been affected by strong movements in relative prices brought about by the surging costs of energy and non-energy commodities, with significant implications for the terms of trade, the exchange rate, and the allocation of resources across Canadian sectors and regions. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Labour markets, Productivity, Recent economic and financial developments JEL Code(s): E, E2, E23, E24, O, O4, O47