Central Bank Digital Currency and Monetary Policy Staff Working Paper 2018-36 Mohammad Davoodalhosseini Many central banks are contemplating whether to issue central bank digital currency. This piece explores the implications as well as potential motivators of such a step. Content Type(s): Staff research, Staff working papers Research Topic(s): Digital currencies and fintech, Monetary policy JEL Code(s): E, E4, E42, E5, E50
November 11, 2008 The Role of Dealers in Providing Interday Liquidity in the Canadian-Dollar Market Bank of Canada Review - Winter 2008-2009 Chris D'Souza Access to information about the future direction of the exchange rate can be extremely valuable in the foreign exchange market. Evidence presented in this article suggests that Canadian dealers are more likely to provide interday liquidity to foreign, rather than Canadian, financial customers, since foreign financial flows can be more informative about future movements in the exchange rate. The author reveals a statistical relationship between the supply of liquidity provided by non-financial firms and that provided by dealing institutions across time, and across markets, and suggests that the relationship between the positions of commercial clients and market-makers, and the role played by dealers in interday liquidity provision, has been understated in the market microstructure literature. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Exchange rates, Financial institutions, Financial markets, Market structure and pricing
International Economic Sanctions and Third-Country Effects Staff Working Paper 2023-46 Fabio Ghironi, Daisoon Kim, Galip Kemal Ozhan We study the transmission and third-country effects of international sanctions. A sanctioned country’s losses are mitigated, and the sanctioning country’s losses amplified, if a third country does not join the sanctions, but the third country benefits from not joining. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Exchange rates, International topics JEL Code(s): F, F3, F31, F4, F41, F42, F5, F51
Financial Market Imperfection, Overinvestment, and Speculative Precaution Staff Working Paper 2004-27 Christian Calmès The author uses panel data to assess the sensitivity of investment to cash flow in non-financial firms, taking into account the role their financial health plays in investment decisions. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles JEL Code(s): D, D9, D92, E, E2, E22, E4, E44, G, G3, G33
A Behavioral New Keynesian Model of a Small Open Economy Under Limited Foresight Staff Working Paper 2023-44 Seunghoon Na, Yinxi Xie This paper studies exchange rate dynamics by incorporating bounded rationality, that is, limited foresight, in a small open-economy model. This behavior of limited foresight helps explain several observations and puzzles in the data of exchange rate movements. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Exchange rates, International topics, Monetary policy transmission JEL Code(s): E, E4, E43, E7, E70, F, F3, F31, F4, F41
The Central Bank’s Dilemma: Look Through Supply Shocks or Control Inflation Expectations? Staff Working Paper 2022-41 Paul Beaudry, Thomas J. Carter, Amartya Lahiri When countries are hit by supply shocks, central banks often face the dilemma of either looking through such shocks or reacting to them to ensure that inflation expectations remain anchored. In this paper, we propose a tractable framework to capture this dilemma and then explore optimal policy under a range of assumptions about how expectations are formed. Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Economic models, Inflation and prices, Monetary policy, Monetary policy and uncertainty, Monetary policy communications JEL Code(s): E, E1, E12, E2, E24, E3, E31, E5, E52, E58, E6, E65
Institutional Quality, Trade, and the Changing Distribution of World Income Staff Working Paper 2006-19 Brigitte Desroches, Michael Francis Conventional wisdom holds that institutional changes and trade liberalization are two main sources of growth in per capita income around the world. Content Type(s): Staff research, Staff working papers Research Topic(s): Development economics, International topics JEL Code(s): F, F1, F11, F15, O, O1, O11, P, P4, P48
Privacy as a Public Good: A Case for Electronic Cash Staff Working Paper 2019-24 Rodney J. Garratt, Maarten van Oordt Cash gives users a high level of privacy when making payments, but the use of cash to make payments is declining. People increasingly use debit cards, credit cards or other methods to pay. Content Type(s): Staff research, Staff working papers Research Topic(s): Bank notes, Central bank research, Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): E, E4, E42, G, G2, G28
Convergence in a Stochastic Dynamic Heckscher-Ohlin Model Staff Working Paper 2006-23 Partha Chatterjee, Malik Shukayev The authors characterize the equilibrium for a small economy in a dynamic Heckscher-Ohlin model with uncertainty. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models JEL Code(s): F, F4, F43, O, O4, O41
Why Do Central Banks Make Public Announcements of Open Market Operations? Staff Working Paper 2020-35 Narayan Bulusu Central banks communicate the results of open market operations. This helps participants in financial markets more accurately estimate the prevailing demand and supply conditions in the market for overnight loans. Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Monetary policy implementation JEL Code(s): D, D5, D52, E, E5, E58, G, G2, G21