A Primer on Neo-Fisherian Economics Staff analytical note 2016-14 Robert Amano, Thomas J. Carter, Rhys R. Mendes Conventional models imply that central banks aiming to raise inflation should lower nominal rates and thus stimulate aggregate demand. However, several economists have recently challenged this conventional wisdom in favour of an alternative “neo-Fisherian’’ view under which higher nominal rates might in fact lead to higher inflation. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E4, E5 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission
Assessing Global Potential Output Growth: October 2020 Staff discussion paper 2020-10 Xin Scott Chen, Ali Jaffery, Guillaume Nolin, Karim Salhab, Peter Shannon, Subrata Sarker This paper presents updated estimates of potential output growth for the global economy through 2022. Global potential output growth is expected to decline sharply in the aftermath of the COVID-19 pandemic and recover partially by the end of the projection horizon of the October 2020 Monetary Policy Report. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E1, E10, E2, E20, O, O4 Research Theme(s): Monetary policy, Real economy and forecasting, Structural challenges, Demographics and labour supply, Digitalization and productivity
January 27, 2012 Simulation Analysis: A Tool for Examining the Balance between Safety and Efficiency in Canada’s Large Value Transfer System Financial System Review - December 2005 Neville Arjani Content Type(s): Publications, Financial System Review articles
Financial Development Beyond the Formal Financial Market Staff working paper 2018-49 Lin Shao This paper studies the effects of financial development, taking into account both formal and informal financing. Using cross-country firm-level data, we document that informal financing is utilized more by rich countries than poor countries. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E44, O, O1, O17, O4, O47 Research Theme(s): Financial system, Financial institutions and intermediation, Household and business credit, Monetary policy, Real economy and forecasting
The Impacts of Monetary Policy Statements Staff analytical note 2017-22 Bruno Feunou, Corey Garriott, James Kyeong, Raisa Leiderman In this note, we find that market participants react to an unexpected change in the tone of Canadian monetary policy statements. When the market perceives that the Bank of Canada plans to tighten (or alternatively, loosen) the monetary policy earlier than previously expected, the Canadian dollar appreciates (or depreciates) and long-term Government of Canada bond yields increase (or decrease). The tone of a statement is particularly relevant to the market when the policy rate has been unchanged for some time. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E4, E43, E5, E52, F, F3, F31, G, G1, G12 Research Theme(s): Financial markets and funds management, Market functioning, Monetary policy, Monetary policy framework and transmission
Combining Large Numbers of Density Predictions with Bayesian Predictive Synthesis Staff working paper 2023-45 Tony Chernis I show how to combine large numbers of forecasts using several approaches within the framework of a Bayesian predictive synthesis. I find techniques that choose and combine a handful of forecasts, known as global-local shrinkage priors, perform best. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C1, C11, C5, C52, C53, E, E3, E37 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Real economy and forecasting
Financial Constraint and Productivity: Evidence from Canadian SMEs Staff working paper 2016-44 Shutao Cao, Danny Leung The degree to which financial constraint is binding is often not directly observable in commonly used business data sets (e.g., Compustat). In this paper, we measure and estimate the likelihood of a firm being constrained by external financing using a data set of small- and medium-sized Canadian firms. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D2, D24, G, G3, G32, L, L2, L25 Research Theme(s): Financial system, Financial institutions and intermediation, Household and business credit, Models and tools, Economic models, Structural challenges, Digitalization and productivity
October 16, 2023 Canadian Survey of Consumer Expectations—Third Quarter of 2023 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. Content Type(s): Publications, Canadian Survey of Consumer Expectations
Endogenous Time Variation in Vector Autoregressions Staff working paper 2020-16 Danilo Leiva-Leon, Luis Uzeda We introduce a new class of time-varying parameter vector autoregressions (TVP-VARs) where the identified structural innovations are allowed to influence — contemporaneously and with a lag — the dynamics of the intercept and autoregressive coefficients in these models. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C1, C11, C3, C32, E, E3, E31, E5, E52 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission
Strengthening Inflation Targeting: Review and Renewal Processes in Canada and Other Advanced Jurisdictions Staff discussion paper 2020-7 Robert Amano, Thomas J. Carter, Lawrence L. Schembri We summarize the review and renewal process at four central banks (Reserve Bank of New Zealand, Bank of England, Sveriges Riksbank and the US Federal Reserve Bank) and compare them with the process at the Bank of Canada, which has been well-established since 2001. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E5, E52, E58 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission