April 7, 2009 Price-Level Uncertainty, Price-Level Targeting, and Nominal Debt Contracts Bank of Canada Review - Spring 2009 Allan Crawford, Césaire Meh, Yaz Terajima Many central banks around the world have embraced inflation targeting as a monetary policy framework. Interest is growing, however, in price-level targeting as an alternative. The choice of frameworks has important consequences for financial contracts, most of which are not fully indexed to the price level. Changes in the price level therefore lead to changes in the real value of contracts. Content Type(s): Publications, Bank of Canada Review articles
Corporate investment and monetary policy transmission in Canada Staff analytical note 2020-26 Min Jae Kim, Jonathan Witmer Unexpected changes in interest rates lead small firms to materially change their investment rate. Large firms, in contrast, show a smaller response. This suggests both that financial conditions are an important channel for transmitting monetary policy and that firm characteristics can help us better understand fluctuations in business investment. Content Type(s): Staff research, Staff analytical notes JEL Code(s): D, D2, D22, D9, D92, G, G3, G31, G32 Research Theme(s): Financial system, Household and business credit, Monetary policy, Monetary policy framework and transmission
January 27, 2012 Strengthening Defined-Benefit Pension Plans Financial System Review - December 2005 Jim Armstrong, Jack Selody Content Type(s): Publications, Financial System Review articles
Occasionally Binding Constraints in Large Models: A Review of Solution Methods Staff discussion paper 2021-5 Jonathan Swarbrick Solving macroeconomic models is difficult. One challenge is the occasionally binding constraint of the zero lower bound on nominal interest rates. This paper reviews various ways to solve models that include this feature. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C6 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission
Production Networks and the Propagation of Commodity Price Shocks Staff working paper 2020-44 Shutao Cao, Wei Dong We examine the macro implications of commodity price shocks in a model with multiple production sectors that are interconnected within a commodity-exporting small open economy. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D5, D57, F, F4, F41 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting, Structural challenges, International trade, finance and competitiveness
Monetary Policy, Credit Constraints and SME Employment Staff working paper 2022-49 Julien Champagne, Émilien Gouin-Bonenfant We revisit an old question: how do financial constraints affect the transmission of monetary policy to the real economy? To answer this question, we propose a simple empirical strategy that combines firm-level employment and balance sheet data, identified monetary policy shocks and survey data on financing activities. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E3, E4, E43, E5, E52, G, G3 Research Theme(s): Financial system, Household and business credit, Monetary policy, Monetary policy framework and transmission, Real economy and forecasting
The Case of Serial Disappointment Staff analytical note 2016-10 Justin-Damien Guénette, Nicholas Labelle, Martin Leduc, Lori Rennison Similar to those of other forecasters, the Bank of Canada’s forecasts of global GDP growth have shown persistent negative errors over the past five years. This is in contrast to the pre-crisis period, when errors were consistently positive as global GDP surprised to the upside. All major regions have contributed to the forecast errors observed since 2011, although the United States has been the most persistent source of notable errors. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E2, E27, E6, E66, F, F0, F01 Research Theme(s): Models and tools, Economic models, Monetary policy, Real economy and forecasting
Extreme Weather and Low-Income Household Finance: Evidence from Payday Loans Staff working paper 2024-1 Shihan Xie, Victoria Wenxin Xie, Xu Zhang This paper explores the impact of extreme weather exposures on the financial outcomes of low-income households. Our findings highlight the heightened financial vulnerability of low-income households to environmental shocks and underscore the need for targeted policies. Content Type(s): Staff research, Staff working papers JEL Code(s): G, G5, Q, Q5, Q54 Research Theme(s): Financial system, Household and business credit, Structural challenges, Climate change
Identifying Aggregate Shocks with Micro-level Heterogeneity: Financial Shocks and Investment Fluctuation Staff working paper 2020-17 Xing Guo This paper identifies aggregate financial shocks and quantifies their effects on business investment based on an estimated DSGE model with firm-level heterogeneity. On average, financial shocks contribute only 3% of the variation in U.S. public firms’ aggregate investment. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E1, E12, E2, E22, G, G3, G31, G32 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission, Real economy and forecasting
February 1, 2012 Excess Collateral in the LVTS: How Much Is Too Much? Financial System Review - December 2003 Kim McPhail, Anastasia Vakos Content Type(s): Publications, Financial System Review articles