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3037 Results

February 19, 2015

Inflation, Expectations and Monetary Policy

Remarks Agathe Côté Association québécoise des technologies Mont-Tremblant, Quebec
Deputy Governor Agathe Côté discusses the importance of inflation expectations for monetary policy and a new survey the Bank of Canada created to monitor household expectations.

The Role of Foreign Exchange Dealers in Providing Overnight Liquidity

Staff Working Paper 2008-44 Chris D'Souza
This paper illustrates that dealers in foreign exchange markets not only provide intraday liquidity, they are key participants in the provision of overnight liquidity. Dealing institutions receive compensation for holding undesired inventory balances in part from the information they receive in customer trades.
Content Type(s): Staff research, Staff working papers Research Topic(s): Exchange rates, Financial markets, Market structure and pricing JEL Code(s): D, D8, D82, F, F3, F31, G, G2, G21

Exchange Rate Fluctuations, Plant Turnover and Productivity

Staff Working Paper 2010-18 Ben Tomlin
In a small open economy fluctuations in the real exchange rate can affect plant turnover, and thus aggregate productivity, by altering the makeup of plants that populate the market. An appreciation of the local currency increases the level of competition in the domestic market as import competition intensifies and export opportunities shrink, forcing less productive plants from the market and compelling new entrants to be more competitive than they otherwise would have been.
Content Type(s): Staff research, Staff working papers Research Topic(s): Exchange rates, Market structure and pricing, Productivity JEL Code(s): D, D2, D21, D24, L, L1, L11

Downward Nominal-Wage Rigidity: Micro Evidence from Tobit Models

Staff Working Paper 2001-7 Allan Crawford, Geoff Wright
This paper uses Tobit models and data for union contracts to examine the extent of downward nominal-wage rigidity in Canada. To be consistent with important stylized facts, the models allow the variance of the notional wage-change distribution to be time-varying and test for menu-cost effects.
Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation targets, Labour markets JEL Code(s): E, E2, E24, E5, E52, E6, E61

What to Target? Insights from a Lab Experiment

Staff Working Paper 2021-53 Isabelle Salle
In a laboratory experiment, we ask participants to predict inflation using three different policy regimes: inflation targeting—with and without greater communication of the target—average inflation targeting and price level targeting. We use participants’ predictions to compare the level and stability of inflation under each regime.

Monetary Policy Implementation and Payment System Modernization

Staff Working Paper 2020-26 Jonathan Witmer
Canada plans to adopt a retail payment system to allow Canadians to pay in real time (or near real time) 24 hours a day, 7 days a week. However, the traditional model for setting the overnight interest rate does not operate 24/7.

Perhaps the FOMC Did What It Said It Did: An Alternative Interpretation of the Great Inflation

Staff Working Paper 2007-19 Sharon Kozicki, P. A. Tinsley
This paper uses real-time briefing forecasts prepared for the Federal Open Market Committee (FOMC) to provide estimates of historical changes in the design of U.S. monetary policy and in the implied central-bank target for inflation. Empirical results support a description of policy with an effective inflation target of roughly 7 percent in the 1970s.
February 23, 2012

Household Borrowing and Spending in Canada

Understanding how much of the increased debt load of Canadian households has been used to finance household spending on consumption and home renovation is important for the conduct of monetary policy. In this article, the authors use a comprehensive data set that provides information on the uses of debt by Canadian households. They first present some facts regarding the evolution of Canadian household debt over the period from 1999 to 2010, emphasizing the increased importance of debt flows that are secured by housing. They then explore how Canadian households have used their borrowed funds over the same period, and assess the role of these borrowed funds in financing total consumption and spending on home renovation. Finally, they examine the possible effects of a decline in house prices on consumption when housing equity is used as collateral against household indebtedness.

Strategic Complementarities and Money Market Fund Liquidity Management

Staff Working Paper 2017-14 Jonathan Witmer
Following the financial crisis, there has been increased regulatory focus on the management of liquidity in mutual funds and, specifically, whether funds hold enough liquidity to guard against the potential for investor runs.
Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial markets JEL Code(s): F, F3, F30, G, G0, G01, G1, G18, G2, G20

Drivers of Weak Wage Growth in Advanced Economies

Since the global financial crisis, advanced-economy wage growth has been generally low relative to past recoveries, especially after accounting for the evolution of labour market conditions over this period. This paper investigates a variety of potential explanations for this weakness, drawing on findings from the literature as well as analysis of recent labour market data in advanced economies.
Content Type(s): Staff research, Staff analytical notes Research Topic(s): International topics, Labour markets JEL Code(s): E, E3, E31, F, F0, J, J3
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