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The countercyclical capital buffer is part of Basel III, the set of regulatory measures developed in response to the financial crisis of 2007–09. This study focuses on how time-varying capital buffers can address inefficiencies in economies with endogenous financial crises.

The ratio of non-financial corporate debt to gross domestic product in Canada has increased noticeably in recent years and is currently at an all-time high. In light of this development, we use a unique firm-level dataset to construct vulnerability indicators for the non-financial corporate sector in Canada.

We examine the economic implications of border carbon adjustments (BCAs) for Canada. We find that, BCAs, in the form of import tariffs, reduce Canada’s carbon leakage and improve its competitiveness when Canada is part of a broad coalition of BCA-implementing countries. Welfare also improves when tariff revenues are transferred to households.

Multi-stage production is widely recognized as an important feature of the modern global economy. This feature has been incorporated into many state-of-the-art quantitative trade models, and has been shown to deliver significant additional gains from international trade.

Deputy Governor Tim Lane discusses the implications of climate change—and actions to address it—for Canada’s economy and financial system.

This paper studies the relationship between bank holding company affiliation and the individual and systemic risk of banks. Using the 2005 hurricane season in the US as an exogenous shock to bank balance sheets, we show that banks that are part of a holding parent company are more resilient than independent banks.

Is shale oil production in the United States a factor in the 2014 oil price decline? Which methods of payment are commonly accepted by merchants in Canada? Bank researchers share their insights on these topics. They also provide an update on the neutral rate of interest as well as on changes to the Bank’s operational framework for market operations.

Consumers’ perceptions of current inflation remain elevated and are diverging from actual inflation. Perceptions of high inflation are also leading to persistently high expectations for inflation over the next 12 months. Consumers’ expectations for interest rates one year from now also remain high, and many consumers believe that the impacts of higher interest rates on their household spending are far from over. Homeowners with a variable-rate mortgage are more likely than other consumers to report being worse off due to high interest rates. Consumers’ plans to purchase services, such as vacations or concerts, are more widespread than plans to make major purchases of goods that are likely to be financed with loans, such as vehicles or appliances. Workers are reporting signs of job market cooling, such as more time spent looking for a new job, but they remain confident about the labour market.

This article examines what market conditions lead to extreme losses in global financial systems. Using a reverse stress testing approach, it introduces two measures of systemic risk by starting from the tail losses and working backward to identify the events most closely associated with them.