Endogenous Credibility and Wage-Price Spirals Staff working paper 2024-14 Olena Kostyshyna, Tolga Özden, Yang Zhang We quantitively assess the risks of a wage-price spiral occurring in Canada over history. We find the risk of a wage-price spiral increases when the inflation expectations become unanchored and the credibility of central banks declines. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C2, C22, E, E0, E00, E4, E47, E7 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission
August 18, 2010 Strengthening International Capital and Liquidity Standards: A Macroeconomic Impact Assessment for Canada G-20 leaders have agreed on comprehensive financial sector reforms to reduce the risk of future crises and to strengthen banking systems. Raising the amount and quality of capital and liquidity that financial institutions must carry is a central component of the reforms. The G-20 is developing a set of proposals for agreement by leaders at […]
Exploring Wage Phillips Curves in Advanced Economies Staff discussion paper 2019-8 Rose Cunningham, Vikram Rai, Kristina Hess We investigate the extent to which excess supply (demand) in labour markets contributes to a lower (higher) growth rate of average nominal wages for workers. Using panel methods on data from 10 advanced economies for 1992–2018, we produce reduced-form estimates of a wage Phillips curve specification that is consistent with a New Keynesian framework. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C3, C33, E, E3, E31, E32 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Structural challenges, Demographics and labour supply
A Counterfactual Valuation of the Stock Index as a Predictor of Crashes Staff working paper 2017-38 Tom Roberts Stock market fundamentals would not seem to meaningfully predict returns over a shorter-term horizon—instead, I shift focus to severe downside risk (i.e., crashes). Content Type(s): Staff research, Staff working papers JEL Code(s): G, G0, G01, G1, G12, G17, G19 Research Theme(s): Financial markets and funds management, Market functioning, Financial system, Financial stability and systemic risk
June 21, 2007 Financial System Review - June 2007 The Financial System Review is one vehicle that the Bank of Canada uses to contribute to the strength of the Canadian financial system. The Developments and Trends section of the Review aims to provide analysis and discussion of current developments and trends in the Canadian financial sector. Content Type(s): Publications, Financial Stability Report
Central Bank Digital Currency and Monetary Policy Staff working paper 2018-36 Mohammad Davoodalhosseini Many central banks are contemplating whether to issue central bank digital currency. This piece explores the implications as well as potential motivators of such a step. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E42, E5, E50 Research Theme(s): Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation, Money and payments, Digital assets and fintech
Global Real Activity for Canadian Exports: GRACE Staff discussion paper 2017-2 André Binette, Tony Chernis, Daniel de Munnik Canadian exports have often disappointed since the Great Recession. The apparent disconnect between exports and the Bank of Canada’s current measure of foreign demand has created an impetus to search for an alternative. Content Type(s): Staff research, Staff discussion papers JEL Code(s): F, F1, F10, F14, F4, F43 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Real economy and forecasting, Structural challenges, International trade, finance and competitiveness
A Macroprudential Theory of Foreign Reserve Accumulation Staff working paper 2019-43 Fernando Arce, Julien Bengui, Javier Bianchi This paper proposes a theory of foreign reserves as macroprudential policy. We study an open-economy model of financial crises in which pecuniary externalities lead to overborrowing, and show that by accumulating international reserves, the government can achieve the constrained-efficient allocation. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D5, D52, D6, D62, F, F3, F34 Research Theme(s): Financial markets and funds management, Funds management, International markets and currencies, Financial system, Financial stability and systemic risk, Monetary policy, Monetary policy tools and implementation
The Neutral Rate in Canada: 2019 Update Staff analytical note 2019-11 Thomas J. Carter, Xin Scott Chen, José Dorich This note provides an update on Bank of Canada staff’s assessment of the Canadian neutral rate. The neutral rate is the policy rate needed to keep output at its potential level and inflation at target once the effects of any cyclical shocks have dissipated. This medium- to long-run concept serves as a benchmark for gauging the degree of monetary stimulus provided by a given policy setting. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E4, E40, E43, E5, E50, E52, E58, F, F4, F41 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission