Staff working papers

• Monetary Policy Transmission amid Demand Reallocations

  Staff Working Paper 2024-42 Julien Bengui, Lu Han, Gaelan MacKenzie

  We analyze the transmission of monetary policy during different phases of a sectoral demand reallocation episode when there are frictions to increasing production in a sector. Monetary policy is more effective in reducing inflation when a larger proportion of sectors are expanding or expect to expand in the near future.

  Content Type(s): Staff research, Staff working papers Topic(s): Domestic demand and components, Inflation and prices, Monetary policy transmission JEL Code(s): E, E1, E12, E2, E24, E3, E31, E5, E52

• Monetary Policy Transmission to Small Business Loan Performance: Evidence from Loan-Level Data

  Staff Working Paper 2024-41 Rodrigo Sekkel, Tamon Takamura, Yaz Terajima

  We analyze the dynamic and heterogeneous responses of small-business loan performance to a monetary-policy shock using loan-level data in Canada. We find evidence of monetary policy transmission through the cash-flow channel and the aggregate demand channel as well as some, though limited, impact of collateral to discipline loan repayment.

  Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, Monetary policy transmission JEL Code(s): C, C3, C32, E, E1, E17, E3, E37, E5, E52

• Immigration and US Shelter Prices: The Role of Geographical and Immigrant Heterogeneity

  Staff Working Paper 2024-40 James Cabral, Walter Steingress

  The arrival of immigrants increases demand for housing and puts upward pressure on shelter prices. Using instrumental variables based on the ancestry composition of residents in US counties, we estimate the causal impact of immigration on local shelter prices.

  Content Type(s): Staff research, Staff working papers Topic(s): Housing, Inflation and prices, International topics, Regional economic developments JEL Code(s): J, J6, J61, R, R2, R23, R3, R31

• From Micro to Macro Hysteresis: Long-Run Effects of Monetary Policy

  Staff Working Paper 2024-39 Felipe Alves, Giovanni L. Violante

  We explore the long-run effects of a monetary policy shock in a Heterogeneous Agent New Keynesian model built on the micro evidence that job losses lead to persistently lower individual earnings through a combination of skill decay and abandonment of the labour force.

  Content Type(s): Staff research, Staff working papers Topic(s): Labour markets, Monetary policy transmission JEL Code(s): E, E2, E21, E24, E3, E31, E32, E5, E52, J, J2, J24, J6, J64

• Does Unconventional Monetary and Fiscal Policy Contribute to the COVID Inflation Surge in the US?

  Staff Working Paper 2024-38 Jing Cynthia Wu, Yinxi Xie, Ji Zhang

  We assess whether unconventional monetary and fiscal policy implemented in response to the COVID-19 pandemic in the U.S. contribute to the 2021-2023 inflation surge through the lens of several different empirical methodologies and establish a null result.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Central bank research, Fiscal policy, Inflation and prices, Monetary policy JEL Code(s): E, E3, E31, E5, E52, E6, E63

• An Anatomy of Firms’ Political Speech

  Staff Working Paper 2024-37 Pablo Ottonello, Wenting Song, Sebastian Sotelo

  We study the distribution of political speech across U.S. firms. We develop a measure of political engagement based on firms’ communications (earning calls, regulatory filings, and social media) by training a large language model to identify statements that contain political opinions. Using these data, we document five facts about firms’ political engagement.

  Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, Market structure and pricing, Recent economic and financial developments JEL Code(s): D, D2, D22, D6, D63, G, G4, G41, L, L1, L11, L2, L20

• Consumer Credit Regulation and Lender Market Power

  Staff Working Paper 2024-36 Zachary Bethune, Joaquín Saldain, Eric R. Young

  We investigate the welfare consequences of consumer credit regulation in a dynamic, heterogeneous-agent model with endogenous lender market power. Lenders post credit offers and borrowers—some informed and others uninformed—apply for credit. We calibrate the model to match characteristics of the unsecured consumer credit market and use the calibrated model to evaluate interest rate ceilings.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Financial markets, Interest rates JEL Code(s): D, D1, D15, D4, D43, D6, D60, D8, D83, E, E2, E21, G, G5, G51

• Public and Private Money Creation for Distributed Ledgers: Stablecoins, Tokenized Deposits, or Central Bank Digital Currencies?

  Staff Working Paper 2024-35 Jonathan Chiu, Cyril Monnet

  This paper explores the implications of introducing digital public and private monies (e.g. tokenized central bank digital currency [CBDC] or tokenized deposits) for stablecoins and illicit crypto transactions.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Financial stability, Monetary policy JEL Code(s): E, E5, E50, E58

• Estimating the Portfolio-Balance Effects of the Bank of Canada’s Government of Canada Bond Purchase Program

  Staff Working Paper 2024-34 Antonio Diez de los Rios

  Using a novel dynamic portfolio balance model of the yield curve for Government of Canada bonds, I find that the Bank of Canada’s Government of Canada Bond Purchase Program reduced Canadian 10-year and 5-year zero-coupon yields by 84 and 52 basis points, respectively.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Central bank research, Coronavirus disease (COVID-19), Interest rates, Monetary policy JEL Code(s): E, E4, E43, E5, E52, G, G1, G12, H, H6, H63