D - Microeconomics

• 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 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

• The Digital Economy—Insight from a Special Survey with IT Service Exporters

  Staff Discussion Paper 2016-21 Wei Dong, James Fudurich, Lena Suchanek

  Information technology (IT) is an increasingly integral part of everyday business and personal life reflecting the ongoing and accelerating digital transformation of the economy. In this paper, we present information gathered from a survey with export-oriented firms in the Canadian IT service industry and consultations with industry associations aimed at shedding light on this small but highly dynamic sector.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Firm dynamics, Service sector JEL Code(s): D, D2, D22, L, L8, L86, O, O3, O33

• Monetary Policy Tradeoffs Between Financial Stability and Price Stability

  Staff Working Paper 2016-49 Malik Shukayev, Alexander Ueberfeldt

  We analyze the impact of interest rate policy on financial stability in an environment where banks can experience runs on their short-term liabilities, forcing them to sell assets at fire-sale prices.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial stability, Monetary policy framework, Monetary policy transmission JEL Code(s): D, D6, D62, E, E3, E32, E4, E44, G, G0, G01

• Financial Constraint and Productivity: Evidence from Canadian SMEs

  Staff Working Paper 2016-44 Shutao Cao, Danny Leung

  The degree to which financial constraint is binding is often not directly observable in commonly used business data sets (e.g., Compustat). In this paper, we measure and estimate the likelihood of a firm being constrained by external financing using a data set of small- and medium-sized Canadian firms.

  Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, Productivity JEL Code(s): D, D2, D24, G, G3, G32, L, L2, L25

• Household Risk Assessment Model

  Technical Report No. 106 Brian Peterson, Tom Roberts

  Household debt can be an important source of vulnerability to the financial system. This technical report describes the Household Risk Assessment Model (HRAM) that has been developed at the Bank of Canada to stress test household balance sheets at the individual level.

  Content Type(s): Staff research, Technical reports Topic(s): Financial stability, Housing, Sectoral balance sheet JEL Code(s): C, C0, C6, C63, C65, D, D0, D1, D14

• The Impact of Macroprudential Housing Finance Tools in Canada: 2005–10

  Staff Working Paper 2016-41 Jason Allen, Timothy Grieder, Brian Peterson, Tom Roberts

  This paper combines loan-level administrative data with household-level survey data to analyze the impact of recent macroprudential policy changes in Canada using a microsimulation model of mortgage demand of first-time homebuyers.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial system regulation and policies JEL Code(s): C, C6, C63, D, D1, D14, G, G2, G28

• Financial Inclusion—What’s it Worth?

  Staff Working Paper 2016-30 Miguel Ampudia, Michael Ehrmann

  The paper studies the determinants of being unbanked in the euro area and the United States as well as the effects of being unbanked on wealth accumulation. Based on household-level data from The Eurosystem Household Finance and Consumption Survey and the U.S. Survey of Consumer Finances, it first documents that there are, respectively, 3.6 per cent and 7.5 per cent of unbanked households in the two economies.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Financial services, Financial system regulation and policies, Housing JEL Code(s): D, D1, D14, G, G2, G21, G28

• The Impact of Bankruptcy Reform on Insolvency Choice and Consumer Credit

  Staff Working Paper 2016-26 Jason Allen, Kiana Basiri

  We examine the impact of the 2009 amendments to the Canadian Bankruptcy and Insolvency Act on insolvency decisions. Rule changes steered debtors out of division I proposals and into the more cost-effective division II proposals.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit and credit aggregates, Financial institutions, Financial system regulation and policies JEL Code(s): D, D1, D14, G, G2, K, K3, K35
• May 16, 2016

  Estimating Canada’s Effective Lower Bound

  Bank of Canada Review - Spring 2016 Jonathan Witmer, Jing Yang

  Recently, the Bank of Canada has estimated the effective lower bound (ELB) on its policy interest rate to be about -50 basis points. This article outlines the analysis that underpins that estimate by quantifying the costs of storing and using cash in Canada. It also explores how some international markets have adapted to negative interest rates, issues surrounding their implementation, as well as their transmission to other interest rates in the economy. Finally, it discusses theoretical ideas on how the ELB could be reduced further.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary policy framework, Monetary policy implementation, Monetary policy transmission JEL Code(s): D, D5, D53, E, E4, E43, E5, E52, E58

• Housing and Tax-Deferred Retirement Accounts

  Staff Working Paper 2016-24 Anson T. Y. Ho, Jie Zhou

  Assets in tax-deferred retirement accounts (TDA) and housing are two major components of household portfolios. In this paper, we develop a life-cycle model to examine the interaction between households’ use of TDA and their housing decisions.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Housing JEL Code(s): C, C6, C61, D, D1, D14, D9, D91, E, E2, E21, H, H2, H24, R, R2, R21