Capital Flows to Developing Countries: Is There an Allocation Puzzle? Staff working paper 2016-53 Josef Schroth Foreign direct investment inflows are positively related to growth across developing countries—but so are savings in excess of investment. I develop an explanation for this well-established puzzle by focusing on the limited availability of consumer credit in developing countries together with general equilibrium effects. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E1, E13, E2, E21, F, F4, F43 Research Theme(s): Financial system, Financial stability and systemic risk, Structural challenges, International trade, finance and competitiveness
Has wage setting changed in Canada? Evidence from the pre-pandemic 2020 Wage-Setting Survey Staff analytical note 2022-10 David Amirault, Sarah Miller, Matthieu Verstraete Just before the pandemic began, the Bank of Canada conducted the 2020 Wage-Setting Survey. The goal was to explore the unusual trend of subdued wage growth in 2018 and 2019 despite a tightening in the labour market. Although this wage puzzle was beginning to resolve at the time of the survey, results highlight changes in several factors that may have important impacts on wage dynamics. Content Type(s): Staff research, Staff analytical notes JEL Code(s): J, J3, J31, J32, J33, J6, J63 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Structural challenges, Demographics and labour supply, Digitalization and productivity
From He-Cession to She-Stimulus? The Labor Market Impact of Fiscal Policy Across Gender Staff working paper 2021-42 Alica Ida Bonk, Laure Simon The effects of fiscal policy shocks on labour market outcomes across gender depend on the type of public expenditure. Women benefit most from increases in the government wage bill, while men are the main beneficiaries of higher investment spending. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E32, E6, E62, J, J1, J16, J2, J21 Research Theme(s): Monetary policy, Real economy and forecasting, Structural challenges, Demographics and labour supply
Consumers’ Path to Mortgage Delinquency Staff analytical paper 2026-3 Laura Zhao, Jia Qi Xiao, Aidan Witts Analyzing TransUnion data from 2015–2024, this study identifies a systematic timeline of distress where rising credit utilization and non-mortgage arrears precede mortgage delinquency by up to two years. This deterioration intensifies in the final six months, providing a robust suite of high-frequency indicators for monitoring emerging household stress. Content Type(s): Staff research, Staff analytical paper JEL Code(s): D, D1, D14, G, G2, G21, G5, G51 Research Theme(s): Financial system, Financial system regulation and oversight, Household and business credit
Analyzing the house price boom in the suburbs of Canada’s major cities during the pandemic Staff analytical note 2022-7 Louis Morel We assess how location affects house prices in Canada. The gap in prices between suburbs and downtown was closing gradually before the pandemic. The gap has been closing faster since spring 2020. This finding reflects a shift in preferences toward more living space. Content Type(s): Staff research, Staff analytical notes JEL Code(s): R, R2, R21, R23, R3, R32 Research Theme(s): Financial system, Household and business credit, Monetary policy, Real economy and forecasting
August 15, 2013 Monitoring Short-Term Economic Developments in Foreign Economies Bank of Canada Review - Summer 2013 Russell Barnett, Pierre Guérin The Bank of Canada uses several short-term forecasting models for the monitoring of key foreign economies - the United States, the euro area, Japan and China. The design of the forecasting models used for each region is influenced by the level of detail required, as well as the timeliness and volatility of data. Forecasts from different models are typically combined to mitigate model uncertainty, and judgment is applied to the model forecasts to incorporate information that is not directly reflected in the most recent indicators. Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): E, E3, E37
Monetary Policy in an AI-Driven Two-Speed Economy Staff working paper 2026-27 Joshua Brault, Maryam Haghighi, Jing Yang We analyze monetary policy responses to AI in a two-sector New Keynesian model, distinguishing augmentation and automation. Both reduce labor demand, requiring accommodation that creates inflation trade-offs. Automation worsens them. Aggregate inflation depends on AI’s form and breadth, making policy stabilization more complex and aggregate data potentially misleading. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E24, E3, E31, E32, E5, E52, J, J2, J23, O, O3, O33 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission, Structural challenges, Digitalization and productivity
Do Monetary Policy Shocks Affect the Neutral Rate of Interest? Staff working paper 2026-6 Danilo Leiva-Leon, Rodrigo Sekkel, Luis Uzeda Can monetary policy influence the neutral real interest rate (r-star)? Using a new statistical model, we show that interest rate hikes tend to lower r-star and long-run growth, but that monetary policy explains only a small share of the long-run decline in r-star. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C3, C32, C5, C51, E, E3, E32, E4, E44 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation
February 23, 2012 Household Insolvency in Canada Bank of Canada Review - Winter 2011-2012 Jason Allen, H. Evren Damar With increasing levels of household debt in recent years, the number of households that may be vulnerable to a negative economic shock is rising as well. Decisions made by both the debtor and the creditor can contribute to insolvency. This article presents some stylized facts about insolvency in Canada’s household sector and analyzes the role of creditors in insolvencies. The average debt of an individual filing for bankruptcy is more than 1.5 times that of an average Canadian household; bankruptcy filers tend to be unemployed or in low-wage jobs, and are typically renters. The article reports that banks that approve more loans per branch, which is interpreted as less-intensive use of soft information (such as the loan officer’s assessment of the applicant’s character), experience more client bankruptcies. This finding has important policy implications, because financial institutions that do not use soft information risk further deterioration in their lending portfolios. Content Type(s): Publications, Bank of Canada Review articles JEL Code(s): D, D4, G, G2
Understanding the Cross‐Country Effects of US Technology Shocks Staff working paper 2017-23 Thuy Lan Nguyen, Wataru Miyamoto Business cycles are substantially correlated across countries. Yet most existing models are not able to generate substantial transmission through international trade. We show that the nature of such transmission depends fundamentally on the features determining the responsiveness of labor supply and labor demand to international relative prices. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E30, F, F4, F41, F44, F6, F62 Research Theme(s): Models and tools, Economic models, Monetary policy, Real economy and forecasting, Structural challenges, International trade, finance and competitiveness