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2157 Results

What do high-frequency expenditure network data reveal about spending and inflation during COVID‑19?

Staff analytical note 2020-20 Kim Huynh, Helen Lao, Patrick Sabourin, Angelika Welte
The official consumer price index (CPI) inflation measure, based on a fixed basket set before the COVID 19 pandemic, may not fully reflect what consumers are currently experiencing. We partnered with Statistics Canada to construct a more representative index for the pandemic with weights based on real-time transaction and survey data.

A Macroeconomic Model of an Epidemic with Silent Transmission and Endogenous Self-isolation

Staff working paper 2020-50 Antonio Diez de los Rios
We study the interaction between epidemics and economic decisions in a model that has silent transmission of the virus. We find that rational behaviour strongly diminishes the severity of the epidemic but worsens the economic recession. We also find that the detection and isolation of not only symptomatic individuals but also those who are infected and asymptomatic or mildly symptomatic can reduce the severity of the recession caused by the pandemic.

Flight from Safety: How a Change to the Deposit Insurance Limit Affects Households’ Portfolio Allocation

Staff working paper 2019-29 H. Evren Damar, Reint Gropp, Adi Mordel
Deposit insurance protects depositors from failing banks, thus making insured deposits risk-free. When a deposit insurance limit is increased, some deposits that previously were uninsured become insured, thereby increasing the share of risk-free assets in households’ portfolios. This increase cannot simply be undone by households, because to invest in uninsured deposits, a household must first invest in insured deposits up to the limit. This basic insight is the starting point of the analysis in this paper.
November 16, 2017

An Update on the Neutral Rate of Interest

The neutral rate serves as a benchmark for measuring monetary stimulus and provides a medium- to long-run anchor for the real policy rate. Global neutral rate estimates have been falling over the past few decades. Factors such as population aging, high corporate savings, and low trend productivity growth are likely to continue supporting a low global neutral rate. These global factors as well as domestic factors are exerting downward pres-sure on the Canadian real neutral rate, which is estimated to be between 0.5 to 1.5 per cent. This low neutral rate has important implications for monetary policy and financial stability.
Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): E, E4, E43, E5, E52, E58, F, F0, F01, F4, F43, O, O4
February 21, 2013

The U.S. Recovery from the Great Recession: A Story of Debt and Deleveraging

The U.S. recovery from the Great Recession has been slow relative to other postwar-era recoveries in the United States. Encouraged by loose lending standards in the pre-crisis period, U.S. households took on unsustainable amounts of debt, making them vulnerable to adverse shocks. Subsequently, a considerable drop in asset prices forced households to repair their balance sheets. While there has been progress in household deleveraging, the government sector now needs to delever, which will restrain growth over the next few years.
Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): E, E2, E21, E6, E60

Interbank Asset-Liability Networks with Fire Sale Management

Staff working paper 2020-41 Zachary Feinstein, Grzegorz Halaj
Raising liquidity when funding is stressed creates pressure on the financial market. Liquidating large quantities of assets depresses their prices and may amplify funding shocks. How do banks weathering a funding crisis contribute to contagion risk?
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