Income Inequality in Canada Staff Discussion Paper 2022-16 Sarah Burkinshaw, Yaz Terajima, Carolyn A. Wilkins Data show that income inequality in Canada increased substantially during the 1980s and first half of the 1990s but has been relatively stable over the past 25 years. This increase was felt mainly by low-income earners and younger people, while older people benefited from higher retirement income. Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Labour markets, Monetary and financial indicators JEL Code(s): D, D3, D31, D6, D63, I, I2, I24, I3, I32, J, J3, J31, J32, N, N3, N32
Job Ladder and Business Cycles Staff Working Paper 2022-14 Felipe Alves During downturns, workers get stuck in low-productivity jobs and wages remain stagnant. I build an heterogenous agent incomplete market model with a full job ladder that accounts for these facts. An adverse financial shock calibrated to the US Great Recession replicates the period’s slow recovery and missing disinflation. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Inflation and prices, Labour markets, Productivity JEL Code(s): D, D3, D31, D5, D52, E, E2, E21, E24, E3, E31, E32
Household Heterogeneity and the Performance of Monetary Policy Frameworks Staff Working Paper 2022-12 Edouard Djeutem, Mario He, Abeer Reza, Yang Zhang Consumption inequality and a low interest rate environment are two important trends in today’s economy. But the implications they may have—and how those implications interact—within different monetary policy frameworks are not well understood. We study the ranking of alternative frameworks that take these trends into account. Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Monetary policy and uncertainty, Monetary policy framework, Monetary policy transmission JEL Code(s): D, D3, D31, D5, D52, E, E2, E21, E3, E31, E5, E52, E58
Heterogeneity and Monetary Policy: A Thematic Review Staff Discussion Paper 2022-2 Felipe Alves, Christian Bustamante, Xing Guo, Katya Kartashova, Soyoung Lee, Thomas Michael Pugh, Kurt See, Yaz Terajima, Alexander Ueberfeldt The theory that rich economic diversity of businesses and households both affects and is shaped by economy-wide fluctuations has strong implications for monetary policy. This review places these insights in a Canadian context. Content Type(s): Staff research, Staff discussion papers Topic(s): Economic models, Monetary policy and uncertainty, Monetary policy transmission JEL Code(s): D, D2, D25, D3, D31, E, E2, E22, E24, E5, E50, E52
Four Decades of Canadian Earnings Inequality and Dynamics Across Workers and Firms Staff Working Paper 2021-20 Audra Bowlus, Émilien Gouin-Bonenfant, Huju Liu, Lance Lochner, Youngmin Park We use four decades of Canadian matched employer-employee data to explore how inequality and the dynamics of individual earnings have evolved over time in Canada. We also examine how the earnings growth of individuals is related to the growth of their employers. Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Firm dynamics, Labour markets, Potential output, Productivity JEL Code(s): D, D2, D22, D3, D31, E, E2, E24, J, J2, J24, J3, J31, J6, J63
Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in Canada and the United States Staff Working Paper 2021-8 Marie-Hélène Felt, Fumiko Hayashi, Joanna Stavins, Angelika Welte Although credit cards are more expensive for merchants to accept than cash or debit cards, merchants typically pass through their costs evenly to all customers. Along with consumer card rewards and banking fees, this creates cross-subsidies between payment methods. Because higher-income individuals tend to use credit cards more than those with lower incomes, our results indicate that these cross-subsidies might lead to regressive distributional effects. Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Financial institutions, Financial services, Market structure and pricing, Payment clearing and settlement systems JEL Code(s): D, D1, D12, D2, D23, D3, D31, E, E4, E42, G, G2, G21, L, L8, L81
Towards a HANK Model for Canada: Estimating a Canadian Income Process Staff Discussion Paper 2020-13 Iskander Karibzhanov How might one simulate a million realistic income paths and compute their statistical moments in under a second? Using CUDA-based methods to estimate the Canadian earnings process, I find that the distribution of labour income growth is sharply peaked with heavy tails—similar to that in the United States. Content Type(s): Staff research, Staff discussion papers Topic(s): Economic models, Labour markets JEL Code(s): D, D3, D31, E, E2, E24, J, J3, J31
House Prices, Consumption and the Role of Non-Mortgage Debt Staff Working Paper 2013-2 Katya Kartashova, Ben Tomlin This paper examines the relationship between house prices and consumption, through the use of debt. Using unique Canadian household-level data that reports the uses of debt, we begin by looking at the relationship between house prices and debt. Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Domestic demand and components JEL Code(s): D, D1, D10, D14, D3, D31, E, E2, E21
Aggregate and Welfare Effects of Redistribution of Wealth Under Inflation and Price-Level Targeting Staff Working Paper 2008-31 Césaire Meh, José-Víctor Ríos-Rull, Yaz Terajima Since the work of Doepke and Schneider (2006a) and Meh and Terajima (2008), we know that inflation causes major redistribution of wealth – between households and the government, between nationals and foreigners, and between households within the same country. Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Inflation and prices, Inflation targets, Inflation: costs and benefits, Monetary policy framework, Sectoral balance sheet JEL Code(s): D, D3, D31, E, E2, E21, E3, E31, E4, E44, E5, E52, E6, E63
Inflation, Nominal Portfolios, and Wealth Redistribution in Canada Staff Working Paper 2008-19 Césaire Meh, Yaz Terajima There is currently a policy debate on potential refinements to monetary policy regimes in countries with low and stable inflation such as the U.S. and Canada. For example, in Canada, a systematic review of the current inflation targeting framework is underway. Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Inflation targets, Inflation: costs and benefits, Monetary policy framework, Sectoral balance sheet JEL Code(s): D, D3, D31, D5, D58, E, E3, E31, E5, E50