SME Failures Under Large Liquidity Shocks: An Application to the COVID-19 Crisis Staff Working Paper 2023-32 Pierre-Olivier Gourinchas, Şebnem Kalemli-Özcan, Veronika Penciakova, Nicholas Sander We study the effects of financial frictions on firm exit when firms face large liquidity shocks. We develop a simple model of firm cost-minimization that introduces a financial friction that limits firms’ borrowing capacity to smooth temporary shocks to liquidity. Content Type(s): Staff research, Staff working papers Topic(s): Coronavirus disease (COVID-19), Firm dynamics, International topics JEL Code(s): D, D2, D21, D22, E, E6, E65, H, H8, H81
The Macroeconomic Effects of Portfolio Equity Inflows Staff Working Paper 2023-31 Nick Sander I provide evidence that portfolio equity inflows can have expansionary effects on GDP and inflation if not offset by monetary policy. I use a shift-share instrument to estimate equity inflows based on plausibly exogenous timing of inflows into mutual funds with heterogeneous country portfolios. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, International financial markets, International topics, Monetary policy JEL Code(s): E, E3, E32, F, F3, F32, F4, F44
June 9, 2023 CDOR Transition – Implications for transactions as stage 1 ends and stage 2 begins The first stage of CARR’s two-staged transition plan will be completed on June 30, 2023. Market participants are expected to have transitioned all new derivative (bilateral, cleared and exchange traded) and securities transactions to CORRA benchmarks, with limited exceptions, after June 30, 2023. Content Type(s): Press, Market notices Source(s): Canadian Alternative Reference Rate Working Group
Understanding Inflation Dynamics: The Role of Government Expenditures Staff Working Paper 2023-30 Chang Liu, Yinxi Xie We study the impact government expenditure has on inflation. We find that changes in government expenditure account for a substantial portion of inflation variations. We also find that inflation and inflation expectations respond negatively to fiscal spending shocks, reaffirming the supply-side channel through which inflation responds to fiscal expansions. Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Fiscal policy, Inflation and prices JEL Code(s): E, E3, E6, E62, E63
June 8, 2023 Bank of Canada Media Interview – The Canadian Press Paul Beaudry, Deputy Governor of the Bank of Canada, gave an interview to Nojoud Al Mallees of The Canadian Press. The interview will be published online and in print. Content Type(s): Press, Media advisories
June 8, 2023 Economic progress report: Are we entering a new era of higher interest rates? Remarks Paul Beaudry Greater Victoria Chamber of Commerce Victoria, British Columbia Deputy Governor Paul Beaudry discusses the latest interest rate decision and suggests reasons why longer-term interest rates could remain higher than they were before the pandemic. Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Central bank research, Coronavirus disease (COVID-19), Domestic demand and components, Expectations, Housing, Inflation and prices, Inflation targets, Interest rates, Labour markets, Monetary policy, Monetary policy transmission, Price stability, Recent economic and financial developments, Service sector