Readability and the Bank of Canada Staff Analytical Note 2018-20 Alexandre Deslongchamps In this note, I assess the readability of Bank of Canada publications using a formula commonly used for this type of evaluation. I find that Bank publications are more difficult to read than the media articles and other content our target audiences likely consume. This suggests that more simple writing can help the Bank better meet its communication objectives. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Credibility, Monetary policy communications JEL Code(s): D, D8, D83
Blockchain Revolution Without the Blockchain Staff Analytical Note 2018-5 Hanna Halaburda The technology behind blockchain has attracted a lot of attention. However, this technology is for the most part not well understood. There is no consensus on what benefits it may bring or on how it may fail. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Digital currencies and fintech, Recent economic and financial developments, Service sector JEL Code(s): D, D8, G, G2, O, O3, O33
Adverse Selection with Heterogeneously Informed Agents Staff Working Paper 2018-7 Mohammad Davoodalhosseini A model of over-the-counter markets is proposed. Some asset buyers are informed in that they can identify high quality assets. Heterogeneous sellers with private information choose what type of buyers they want to trade with. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Financial markets, Financial stability, Financial system regulation and policies, Market structure and pricing JEL Code(s): D, D4, D40, D8, D82, D83, G, G0, G01, G1, G10, G2, G20
How Do Central Bank Projections and Forward Guidance Influence Private-Sector Forecasts? Staff Working Paper 2018-2 Monica Jain, Christopher S. Sutherland We construct a 23-country panel data set to consider the effect of central bank projections and forward guidance on private-sector forecast disagreement. We find that central bank projections and forward guidance matter mainly for private-sector forecast disagreement surrounding upcoming policy rate decisions and matter less for private-sector macroeconomic forecasts. Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Inflation targets, Monetary policy, Monetary policy communications, Monetary policy transmission JEL Code(s): D, D8, D83, E, E3, E37, E5, E52, E58
Competing Currencies in the Laboratory Staff Working Paper 2017-53 Janet Hua Jiang, Cathy Zhang We investigate competition between two intrinsically worthless currencies as a result of decentralized interactions between human subjects. We design a laboratory experiment based on a simple two-country, two-currency search model to study factors that affect circulation patterns and equilibrium selection. Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Digital currencies and fintech JEL Code(s): C, C9, C92, D, D8, D83, E, E4, E40
On the Tail Risk Premium in the Oil Market Staff Working Paper 2017-46 Reinhard Ellwanger This paper shows that changes in market participants’ fear of rare events implied by crude oil options contribute to oil price volatility and oil return predictability. Using 25 years of historical data, we document economically large tail risk premia that vary substantially over time and significantly forecast crude oil futures and spot returns. Content Type(s): Staff research, Staff working papers Research Topic(s): Asset pricing, Econometric and statistical methods, Financial markets JEL Code(s): C, C5, C53, C58, D, D8, D84, E, E4, E44, G, G1, G12, G13, Q, Q4, Q43
Retrieving Implied Financial Networks from Bank Balance-Sheet and Market Data Staff Working Paper 2017-30 Jose Fique In complex and interconnected banking systems, counterparty risk does not depend only on the risk of the immediate counterparty but also on the risk of others in the network of exposures. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial stability JEL Code(s): C, C6, C63, D, D8, D85, G, G2, G21
May 11, 2017 Why Is Global Business Investment So Weak? Some Insights from Advanced Economies Bank of Canada Review - Spring 2017 Robert Fay, Justin-Damien Guénette, Martin Leduc, Louis Morel Various drivers of business investment can be used to explain the underwhelming performance of investment in advanced economies since the global financial crisis, particularly since 2014. The slow growth in aggregate demand cannot by itself explain the full extent of the recent weakness in investment, which appears to be linked primarily to the collapse of global commodity prices and a rise in economic uncertainty. Looking ahead, business investment growth is likely to remain slower than in the pre-crisis period, largely because of structural factors such as population aging. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Business fluctuations and cycles, Domestic demand and components, Economic models, International topics, Monetary policy and uncertainty, Recent economic and financial developments JEL Code(s): C, C2, C22, D, D2, D24, D8, D80, E, E2, E22, F, F0, F01, G, G3, G31
Constrained Efficiency with Adverse Selection and Directed Search Staff Working Paper 2017-15 Mohammad Davoodalhosseini Constrained efficient allocation (CE) is characterized in a model of adverse selection and directed search (Guerrieri, Shimer, and Wright (2010)). CE is defined to be the allocation that maximizes welfare, the ex-ante utility of all agents, subject to the frictions of the environment. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Financial markets, Financial system regulation and policies, Market structure and pricing JEL Code(s): D, D8, D82, D83, E, E2, E24, G, G1, J, J3, J31, J6, J64
Information Sharing and Bargaining in Buyer-Seller Networks Staff Working Paper 2016-63 Sofia Priazhkina, Frank H. Page This paper presents a model of strategic buyer-seller networks with information exchange between sellers. Prior to engaging in bargaining with buyers, sellers can share access to buyers for a negotiated transfer. We study how this information exchange affects overall market prices, volumes and welfare, given different initial market conditions and information sharing rules. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Firm dynamics, Market structure and pricing JEL Code(s): C, C7, C71, C78, D, D2, D21, D4, D43, D8, D85, L, L1, L13