Sluggish Forecasts Staff Working Paper 2018-39 Monica Jain Given the influence that agents’ expectations have on key macroeconomic variables, it is surprising that very few papers have tried to extrapolate agents’ “true” expectations directly from the data. This paper presents one such approach, starting with the hypothesis that there is sluggishness in inflation and real GDP growth forecasts. Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Inflation and prices JEL Code(s): E, E3, E31, E37
On the Evolution of the United Kingdom Price Distributions Staff Working Paper 2018-25 Ba M. Chu, Kim Huynh, David T. Jacho-Chávez, Oleksiy Kryvtsov We propose a functional principal components method that accounts for stratified random sample weighting and time dependence in the observations to understand the evolution of distributions of monthly micro-level consumer prices for the United Kingdom (UK). Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Inflation and prices JEL Code(s): C, C1, C14, C8, C83, E, E3, E31, E37
Bending the Curves: Wages and Inflation Staff Analytical Note 2018-15 Dany Brouillette, Madigan Dockrill, Helen Lao, Laurence Savoie-Chabot As economic slack continues to be absorbed and the labour market tightens, wage growth and inflation could increase faster than expected, which would suggest convexity in their Phillips curves. This note investigates whether there is convexity in the Phillips curves for Canadian wage growth and inflation by testing different empirical approaches over the post-inflation-targeting period. Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, Labour markets JEL Code(s): E, E2, E24, E3, E31, J, J3
Non-linéarité de la courbe de Phillips : un survol de la littérature Staff Analytical Note 2018-3 Renaud St-Cyr The paper reviews evidence from the economic literature on the nature of the relationship between excess capacity and inflation, better known as the Phillips curve. In particular, we examine the linearity of this relationship. This is an important issue in the current economic context in which advanced economies are approaching or exceed their potential output. Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, International topics JEL Code(s): E, E3, E31, E32
Understanding the Time Variation in Exchange Rate Pass-Through to Import Prices Staff Discussion Paper 2017-12 Rose Cunningham, Min Jae Kim, Christian Friedrich, Kristina Hess In this paper, we analyze the presence of time variation in the pass-through from the nominal effective exchange rate to import prices for 24 advanced economies over the period 1995–2015. In line with earlier studies in the literature, we find substantial heterogeneity in the level of exchange rate pass-through across countries. Content Type(s): Staff research, Staff discussion papers Topic(s): Exchange rates, Inflation and prices, International topics, Monetary policy transmission JEL Code(s): E, E3, E31, F, F3, F31, F4, F41
Digitalization and Inflation: A Review of the Literature Staff Analytical Note 2017-20 Karyne B. Charbonneau, Alexa Evans, Subrata Sarker, Lena Suchanek In the past few years, many have postulated that the possible disinflationary effects of digitalization could explain the subdued inflation in advanced economies. In this note, we review the evidence found in the literature. We look at three main channels. Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, Market structure and pricing, Productivity JEL Code(s): D, D2, D22, E, E3, E31, L, L8, L81, O, O3, O33
Digital Transformation in the Service Sector: Insights from Consultations with Firms in Wholesale, Retail and Logistics Staff Analytical Note 2017-19 Wei Dong, James Fudurich, Lena Suchanek Firms increasingly rely on digital technologies such as e-commerce, cloud computing, big data, digital tracking and digital platforms that are reshaping business operations, business models and market structures. In this context, the Bank of Canada consulted with firms in wholesale, retail and logistics, as well as with related industry associations to yield insights on the adoption of digital technologies. Content Type(s): Staff research, Staff analytical notes Topic(s): Firm dynamics, Inflation and prices, Service sector JEL Code(s): D, D2, D22, E, E3, E31, L, L8, L81, L9, L92, O, O3, O33
Global Factors and Inflation in Canada Staff Analytical Note 2017-17 Dany Brouillette, Laurence Savoie-Chabot This note investigates whether the recent weakness in inflation in Canada can be related to global factors not included in the current staff analytical framework (domestic slack, movements in commodity prices and in the exchange rate). A global common factor for inflation among selected advanced economies appears to contain marginal information for Canadian inflation beyond what is found in movements in commodity prices and the exchange rate. Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, Recent economic and financial developments JEL Code(s): E, E3, E31
Low Inflation in Advanced Economies: Facts and Drivers Staff Analytical Note 2017-16 Sanjana Bhatnagar, Anne-Katherine Cormier, Patrisha de Leon-Manlagnit, Elise Martin, Vikram Rai, Renaud St-Cyr, Subrata Sarker, Kristina Hess Since the global financial crisis, core inflation has been persistently below target in most advanced economies. Recently, it has weakened further in several advanced economies despite gradually diminishing slack. This note reviews recent developments in core inflation across advanced economies and identifies distinctive patterns across regions. Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, International topics JEL Code(s): E, E0, E3, E31, F, F0
Changes in Monetary Regimes and the Identification of Monetary Policy Shocks: Narrative Evidence from Canada Staff Working Paper 2017-39 Julien Champagne, Rodrigo Sekkel We use narrative evidence along with a novel database of real-time data and forecasts from the Bank of Canada's staff economic projections from 1974 to 2015 to construct a new measure of monetary policy shocks and estimate the effects of monetary policy in Canada. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Central bank research, Econometric and statistical methods, Exchange rate regimes, Inflation and prices, Inflation targets, Interest rates, Monetary policy, Monetary policy framework JEL Code(s): E, E3, E31, E32, E4, E43, E5, E52, E58