Can the Common-Factor Hypothesis Explain the Observed Housing Wealth Effect? Staff working paper 2016-62 Narayan Bulusu, Jefferson Duarte, Carles Vergara-Alert The common-factor hypothesis is one possible explanation for the housing wealth effect. Under this hypothesis, house price appreciation is related to changes in consumption as long as the available proxies for the common driver of housing and non-housing demand are noisy and housing supply is not perfectly elastic. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E21, R, R3, R31 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Real economy and forecasting
March 22, 2018 Financial Stability: Taking Care of Unfinished Business Remarks Carolyn A. Wilkins Rotman School of Management conference Toronto, Ontario Senior Deputy Governor Carolyn A. Wilkins discusses three areas in which work remains to be done to improve financial stability. Content Type(s): Press, Speeches and appearances, Remarks Subject(s): Currency, Digital currency, Financial system, Financial stability, Monetary policy, Economic models, Inflation targeting framework
Heterogeneity and Monetary Policy: A Thematic Review Staff discussion paper 2022-2 Felipe Alves, Christian Bustamante, Xing Guo, Katya Kartashova, Soyoung Lee, Thomas Michael Pugh, Kurt See, Yaz Terajima, Alexander Ueberfeldt The theory that rich economic diversity of businesses and households both affects and is shaped by economy-wide fluctuations has strong implications for monetary policy. This review places these insights in a Canadian context. Content Type(s): Staff research, Staff discussion papers JEL Code(s): D, D2, D25, D3, D31, E, E2, E22, E24, E5, E50, E52 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission
Noisy Monetary Policy Staff working paper 2018-23 Tatjana Dahlhaus, Luca Gambetti We introduce limited information in monetary policy. Agents receive signals from the central bank revealing new information (“news") about the future evolution of the policy rate before changes in the rate actually take place. However, the signal is disturbed by noise. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C1, C18, C3, C32, E, E0, E02, E4, E43, E5, E52 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation
Breaking Down the US Employment Multiplier Using Micro-Level Data Staff working paper 2025-8 Edoardo Briganti, Holt Dwyer, Ricardo Duque Gabriel, Victor Sellemi Using newly matched data on US defense contracts and restricted administrative employment data, we show that the employment effects of defense procurement are costly, concentrated and slow to diffuse. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E6, E62, H, H5, H57, J, J2, J21 Research Theme(s): Monetary policy, Real economy and forecasting, Structural challenges, Demographics and labour supply
Assessing the Impact of the Bank of Canada’s Government Bond Purchases Staff discussion paper 2024-5 Chinara Azizova, Jonathan Witmer, Xu Zhang In March 2020, the Bank of Canada implemented the Government of Canada Bond Purchase Program, eventually purchasing approximately $340 billion of government bonds. In this paper, we analyze the impact of this program on financial market prices and yields as well as on GDP and inflation. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E5, E52, E58, G, G2, G21, G28 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission, Monetary policy tools and implementation, Real economy and forecasting
Interpreting Volatility Shocks as Preference Shocks Staff working paper 2016-45 Shaofeng Xu This paper examines the relationship between volatility shocks and preference shocks in an analytically tractable endogenous growth model with recursive preferences and stochastic volatility. I show that there exists an explicit mapping between volatility shocks and preference shocks, and a rise in volatility generates the same impulse responses of macroeconomic aggregates as a negative preference shock. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E3 Research Theme(s): Models and tools, Economic models, Monetary policy, Real economy and forecasting
December 14, 2007 The Costs of Inflation in New Keynesian Models Bank of Canada Review - Winter 2007-2008 Steve Ambler Ambler describes three new channels through which inflation affects economic welfare in New Keynesian models. These channels were absent from traditional analyses and may have caused researchers to underestimate the costs associated with variable inflation, even at relatively low levels of inflation. The article concludes with a preliminary assessment of the quantitative importance of the new channels and their significance for monetary policy. Content Type(s): Publications, Bank of Canada Review articles
Entrepreneurial Incentives and the Role of Initial Coin Offerings Staff working paper 2019-18 Rodney J. Garratt, Maarten van Oordt Initial coin offerings (ICOs) are a new mode of financing start-ups that saw an explosion in popularity in 2017 but declined in popularity in the second half of 2018 as regulatory pressure, instances of fraud and reports of poor performance began to undermine their reputation. Content Type(s): Staff research, Staff working papers JEL Code(s): G, G3, G32 Research Theme(s): Financial system, Financial institutions and intermediation, Money and payments, Digital assets and fintech
The Anatomy of Sentiment-Driven Fluctuations Staff working paper 2021-33 Sushant Acharya, Jess Benhabib, Zhen Huo We show that changes in sentiment that aren’t related to fundamentals can drive persistent macroeconomic fluctuations even when all economic agents are rational. Changes in sentiment can also affect how fundamental shocks affect macroeconomic outcomes. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E20, E3, E32, F, F4, F44 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission, Real economy and forecasting