Examining the Impact of Home Purchase Restrictions on China’s Housing Market Staff Working Paper 2021-18 Zhentong Lu, Sisi Zhang, Jian Hong How do “cooling measures” in the housing market—policies aimed to stabilize prices—affect the market? We use a structural model of housing demand and price competition among developers to evaluate China’s home purchase restriction policies implemented in 2010–11. Content Type(s): Staff research, Staff working papers Topic(s): Housing, Market structure and pricing JEL Code(s): O, O1, O18, R, R3, R31, R38
The Bank of Canada COVID‑19 stringency index: measuring policy response across provinces Staff Analytical Note 2021-1 Calista Cheung, Jerome Lyons, Bethany Madsen, Sarah Miller, Saarah Sheikh We construct an index that systematically measures and tracks the stringency of government policy responses to the COVID-19 pandemic across Canadian provinces. Researchers can use this stringency index to analyze how the pandemic is affecting the economy. Content Type(s): Staff research, Staff analytical notes Topic(s): Business fluctuations and cycles, Coronavirus disease (COVID-19), Domestic demand and components, Recent economic and financial developments, Regional economic developments JEL Code(s): E, E2, E20, H, H7, I, I1, I18, R, R1
Household indebtedness risks in the wake of COVID‑19 Staff Analytical Note 2020-8 Olga Bilyk, Anson T. Y. Ho, Mikael Khan, Geneviève Vallée COVID-19 presents challenges for indebted households. We assess these by drawing parallels between pandemics and natural disasters. Taking into account the financial health of the household sector when the pandemic began, we run model simulations to illustrate how payment deferrals and the labour market recovery will affect mortgage defaults. Content Type(s): Staff research, Staff analytical notes Topic(s): Climate change, Coronavirus disease (COVID-19), Credit and credit aggregates, Econometric and statistical methods, Financial stability, Fiscal policy, Housing, Recent economic and financial developments, Sectoral balance sheet JEL Code(s): C, C2, C21, D, D1, D12, D14, E, E2, E24, E27, E6, E62, G, G2, G21, G28, R, R2
How Do Mortgage Rate Resets Affect Consumer Spending and Debt Repayment? Evidence from Canadian Consumers Staff Working Paper 2020-18 Katya Kartashova, Xiaoqing Zhou We study the causal effect of mortgage rate changes on consumer spending, debt repayment and defaults during an expansionary and a contractionary monetary policy episode in Canada. We find asymmetric responses of consumer durable spending, deleveraging and defaults. These findings help us to understand household sector response to interest rate changes. Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Interest rates, Monetary policy, Monetary policy transmission JEL Code(s): D, D1, D12, D14, E, E4, E43, E5, E52, G, G2, G21, R, R3, R31
The Effect of Mortgage Rate Resets on Debt: Evidence from TransUnion (Part I) Staff Analytical Note 2020-2 Katya Kartashova This note studies how decreases in mortgage rates affect the behaviour of borrowers in terms of spending on durable goods and repaying debt. Content Type(s): Staff research, Staff analytical notes Topic(s): Credit and credit aggregates, Housing, Interest rates, Monetary policy, Monetary policy transmission JEL Code(s): D, D1, D12, D14, E, E4, E43, E5, E52, G, G2, G21, R, R3, R31
A Spatial Model of Bank Branches in Canada Staff Working Paper 2020-4 Heng Chen, Matthew Strathearn Using data on bank branch locations across Canada from 2008 to 2018, we explore an interesting aspect of bank branch competition—geographic concentration. We find that bank branch density does not correlate with geographic and market concentration; however, we do find strong correlation with postal-code demographics. Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, Market structure and pricing JEL Code(s): L, L1, R, R3
The Formation of House Price Expectations in Canada: Evidence from a Randomized Information Experiment Staff Analytical Note 2019-24 Marc-André Gosselin, Mikael Khan, Matthieu Verstraete We conduct a randomized information experiment leveraging the Canadian Survey of Consumer Expectations. We provide causal evidence that respondents revise both their short- and medium-term expectations of future house price growth in a way that is consistent with observed short-term momentum in house prices. However, empirically, house price growth tends to revert to its mean in the medium term. Content Type(s): Staff research, Staff analytical notes Topic(s): Financial stability, Housing JEL Code(s): C, C9, D, D8, D84, R, R2, R21
Disentangling the Factors Driving Housing Resales Staff Analytical Note 2019-12 Mikael Khan, Taylor Webley We use a recently developed model and loan-level microdata to decompose movements in housing resales since 2015. We find that fundamental factors, namely housing affordability and full-time employment, have had offsetting effects on resales over our study period. Content Type(s): Staff research, Staff analytical notes Topic(s): Econometric and statistical methods, Financial stability, Financial system regulation and policies, Housing, Recent economic and financial developments JEL Code(s): C, C2, C22, E, E2, R, R2, R21
Local Labor Markets in Canada and the United States Staff Working Paper 2019-12 David Albouy, Alex Chernoff, Chandler Lutz, Casey Warman We examine local labor markets in the United States and Canada from 1990 to 2011 using comparable household and business data. Wage levels and inequality rise with city population in both countries, albeit less in Canada. Content Type(s): Staff research, Staff working papers Topic(s): Labour markets JEL Code(s): J, J2, J21, J3, J31, J6, J61, N, N3, N32, R, R1, R12
Non-Resident Taxes and the Role of House Price Expectations Staff Analytical Note 2019-8 Mikael Khan, Matthieu Verstraete In recent years, the governments of Ontario and British Columbia have imposed taxes on purchases by non-Canadian residents of residential properties in certain jurisdictions. Content Type(s): Staff research, Staff analytical notes Topic(s): Financial stability, Housing JEL Code(s): D, D8, D84, R, R2, R21