Market Size and Entry in International Trade: Product Versus Firm Fixed Costs Staff working paper 2018-43 Walter Steingress This paper develops a theoretical framework to infer the nature of fixed costs from the relationship between entry patterns in international markets and destination market size. If fixed costs are at the firm level, firms take advantage of an intrafirm spillover by expanding firm-level product range (scope). Content Type(s): Staff research, Staff working papers JEL Code(s): F, F1, F12, F14, F2, F23 Research Theme(s): Models and tools, Economic models, Structural challenges, International trade, finance and competitiveness
Anchored Inflation Expectations: What Recent Data Reveal Staff working paper 2025-5 Olena Kostyshyna, Isabelle Salle, Hung Truong We analyze micro-level data from the Canadian Survey of Consumer Expectations through the lens of a heterogeneous-expectations model to study how inflation expectations form over the business cycle. We provide new insights into how households form expectations, documenting that forecasting behaviours, attention and noise in beliefs vary across socio-demographic groups and correlate with views about monetary policy. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D8, D84, E, E3, E31, E7, E70 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission, Real economy and forecasting
December 10, 2007 Inflation Targeting, Price-Level Targeting, and Fluctuations in Canada's Terms of Trade Bank of Canada Review - Winter 2007-2008 Donald Coletti, René Lalonde Coletti and Lalonde compare inflation targeting and price-level targeting in the context of a small open economy subject to sizable terms-of-trade shocks. The authors summarize recent research that compares the ability of price-level targeting and inflation targeting to stabilize the macroeconomy when confronted with shocks similar to those experienced by Canada in recent years. Their preliminary results suggest that price-level targeting may represent a feasible alternative to traditional inflation targeting. Their article also provides insight into the direction of current research in this area at the Bank. Content Type(s): Publications, Bank of Canada Review articles
The impact of a central bank digital currency on payments at the point of sale Staff analytical note 2024-27 Walter Engert, Oleksandr Shcherbakov, André Stenzel We simulate the impact of a central bank digital currency (CBDC) on consumer adoption, merchant acceptance and use of different payment methods. Modest frictions that deter consumer adoption of a CBDC inhibit its market penetration. Minor pricing responses by financial institutions and payment service providers further reduce the impact of a CBDC. Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C5, C51, D, D1, D12, E, E4, E42, L, L1, L14, L5, L52 Research Theme(s): Money and payments, Digital assets and fintech, Retail payments
Financial Crisis Interventions Staff working paper 2016-29 Josef Schroth This paper develops a model of an economy where bank credit supports both productive investment and individual consumption smoothing in the face of idiosyncratic income risk. Bank credit is constrained by bank equity capital. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E1, E13, E3, E32, E4, E44 Research Theme(s): Financial system, Financial stability and systemic risk, Financial system regulation and oversight, Household and business credit
The Distributional Effects of Conventional Monetary Policy and Quantitative Easing: Evidence from an Estimated DSGE Model Staff working paper 2019-6 Stefan Hohberger, Romanos Priftis, Lukas Vogel This paper compares the distributional effects of conventional monetary policy and quantitative easing (QE) within an estimated open-economy DSGE model of the euro area. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E44, E5, E52, F, F4, F41 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation
Untapped Potential: Mobile Device Ownership and Mobile Payments in Canada Staff working paper 2024-25 Marie-Hélène Felt, Angelika Welte, Katrina Talavera We present a two-stage model of mobile phone and mobile payment usage that controls for selectivity. This reveals unobserved factors that work against having a mobile phone and toward mobile paying. Therefore, people who are unable to acquire or choose not to own a mobile device might have unmet payment needs. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C3, C39, D, D1, D12, E, E4, E42 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Digital assets and fintech, Retail payments
Estimating Systematic Risk Under Extremely Adverse Market Conditions Staff working paper 2016-22 Maarten van Oordt, Chen Zhou This paper considers the problem of estimating a linear model between two heavy-tailed variables if the explanatory variable has an extremely low (or high) value. We propose an estimator for the model coefficient by exploiting the tail dependence between the two variables and prove its asymptotic properties. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C1, C14, G, G0, G01 Research Theme(s): Financial system, Financial stability and systemic risk, Models and tools, Econometric, statistical and computational methods
Household Heterogeneity and the Performance of Monetary Policy Frameworks Staff working paper 2022-12 Edouard Djeutem, Mario He, Abeer Reza, Yang Zhang Consumption inequality and a low interest rate environment are two important trends in today’s economy. But the implications they may have—and how those implications interact—within different monetary policy frameworks are not well understood. We study the ranking of alternative frameworks that take these trends into account. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D3, D31, D5, D52, E, E2, E21, E3, E31, E5, E52, E58 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission
December 23, 2005 The Use of Microdata to Assess Risks in the Non-Financial Corporate Sector Financial System Review - December 2005 Meyer Aaron, Dylan Hogg Content Type(s): Publications, Financial System Review articles