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Some suggest the global economy is facing a fourth industrial revolution. Bank researchers discuss the possible implications of digitalization on the economy. This issue also shares insights on the effectiveness of some unconventional monetary policies in a small open economy, how Government of Canada bonds are used throughout their life cycle, as well as how the Big Six Canadian banks choose their funding strategies and why. The final article examines the slow growth in business investment.

Deputy Governor Agathe Côté discusses the inflation-targeting framework and issues the Bank is researching in the run-up to the renewal of the framework in 2016.

Although dealership government and equity securities have, on the surface, similar market structures, the author demonstrates that some subtle differences exist between them that are likely to significantly affect the way market-makers trade, and as such have an impact on the liquidity that they provide.

This paper studies discounting in mortgage markets. Using transaction-level data on Canadian mortgages, we document that over time there's been an increase in the average discount, along with substantial dispersion.

One of the most important factors that must be considered if countries are thinking about lowering the target level of inflation much below 2 per cent is the zero interest bound. Targeting inflation rates that are too low, the authors note, may restrict the ability of monetary policy to respond to economic shocks by limiting the amount by which interest rates can be eased.

In this paper, we study the impact of supply shocks on the Canadian real exchange rate. We specify a structural vector-error-correction model that links the real exchange rate to different fundamentals.

To properly account for the dynamics of key macroeconomic variables, researchers incorporate various internal-propagation mechanisms in their models.

Using wavelets, the author estimates the fractional order of integration of a common long-run money-demand relationship whose parameters are obtained from a full-information maximum-likelihood procedure.

The recent strengh of the U.S. economy and historically low rates of inflation have sparked considerable debate among economists and Federal Reserve officials. In order to better explain the recent behaviour of inflation, some observers have raised the concept of a non-accelerating inflation capacity utilization rate (NAICU). In this study, the author presents a new […]

Implicit government guarantees of banking-sector liabilities reduce market discipline by private sector stakeholders and temper the risk sensitivity of funding costs. This potentially increases the likelihood of bailouts from taxpayers, especially in the absence of effective resolution frameworks.