Staff research, Publications

• Bitcoin Adoption and Beliefs in Canada

  Staff Working Paper 2021-60 Daniela Balutel, Christopher Henry, Jorge Vásquez, Marcel Voia

  Using an economic model as well as survey data from the Bank of Canada, we study what factors influence the adoption of Bitcoin in Canada.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Digital currencies and fintech, Econometric and statistical methods, Economic models JEL Code(s): D, D8, D83, O, O3, O33

• Democratic Political Economy of Financial Regulation

  Staff Working Paper 2021-59 Igor Livshits, Youngmin Park

  We offer a theory of how inefficiently lax financial regulation could arise in a democratic society.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Financial stability, Financial system regulation and policies, Housing, Interest rates JEL Code(s): E, E4, E43, E44, G, G0, G01, G2, G21, G28, P, P4, P48

• Discount Rates, Debt Maturity, and the Fiscal Theory

  Staff Working Paper 2021-58 Alexandre Corhay, Thilo Kind, Howard Kung, Gonzalo Morales

  Do bond risk premiums influence the effects of debt maturity operations? Using a model with realistic bond risk premiums, we show that maturity operations have sizable effects on expected inflation and output when the central bank passively responds to inflation and the fiscal authority weakly responds to the debt level.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Fiscal policy, Interest rates, Monetary policy JEL Code(s): E, E4, E43, E44, E6, E63, G, G1, G12
• November 22, 2021

  Financial System Survey highlights—Autumn 2021

  This article presents the key results from the autumn 2021 Bank of Canada Financial System Survey, conducted between September 7 and September 24, 2021. The survey included a special section on the implications of low interest rates on strategies and risks.

  Content Type(s): Publications, Financial System Survey

• The COVID-19 Consumption Game-Changer: Evidence from a Large-Scale Multi-Country Survey

  Staff Working Paper 2021-57 Alexander Hodbod, Cars Hommes, Stefanie J. Huber, Isabelle Salle

  A multi-country consumer survey investigates why and how much households decreased their consumption in five key sectors after pandemic-related restrictions were lifted in Europe in July 2020. Beyond infection risk and precautionary saving motives, households also reported not missing some consumption items, which may indicate preference shifts and structural changes in the post-COVID-19 economy.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Coronavirus disease (COVID-19), Domestic demand and components, Firm dynamics, Fiscal policy, Recent economic and financial developments JEL Code(s): D, D1, D12, D8, D81, D84, E, E2, E21, E6, E60, E7, E71

• Updated Methodology for Assigning Credit Ratings to Sovereigns

  Staff Discussion Paper 2021-16 Karim McDaniels, Nico Palesch, Sanjam Suri, Zacharie Quiviger, John Walsh

  We update the Bank of Canada’s credit rating methodology for sovereigns, including our approach to assessing their fiscal position and monetary policy flexibility. We also explicitly consider climate-related factors.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Credit risk management, Foreign reserves management JEL Code(s): F, F3, F31, G, G2, G24, G28, G3, G32

• Are Bank Bailouts Welfare Improving?

  Staff Working Paper 2021-56 Malik Shukayev, Alexander Ueberfeldt

  Financial sector bailouts, while potentially beneficial during a crisis, might lead to excessive risk taking if anticipated. Taking expectations and aggregate risk implications into account, we show that bailouts can be welfare improving, but only if capital adequacy constraints are sufficiently tight.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial stability, Financial system regulation and policies JEL Code(s): D, D6, D62, E, E3, E32, E4, E44, G, G0, G01
• November 8, 2021

  Quarterly Financial Report - Third Quarter 2021

  Quarterly Financial Report - Third Quarter 2021 - For the period ended September 30, 2021

  Content Type(s): Publications, Quarterly Financial Report

• Optimal Monetary Policy According to HANK

  Staff Working Paper 2021-55 Sushant Acharya, Edouard Challe, Keshav Dogra

  We study optimal monetary policy in an analytically tractable Heterogeneous Agent New Keynesian model. In the model, the central bank has an incentive to reduce consumption inequality in addition to keeping economic activity at its efficient level and inflation stable.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Monetary policy JEL Code(s): E, E2, E21, E3, E30, E5, E52, E6, E62, E63

• Evaluating the Effects of Forward Guidance and Large-scale Asset Purchases

  Staff Working Paper 2021-54 Xu Zhang

  I propose a novel method to identify and estimate the macroeconomic effects of forward guidance and large-scale asset purchases (LSAP) for each FOMC announcement. I find that LSAP is more important than forward guidance in influencing output and inflation. LSAP puts upward pressure on short-term yields, so it should always be used in conjunction with forward guidance.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Central bank research, Econometric and statistical methods, Interest rates JEL Code(s): E, E5, G, G0