E44 - Financial Markets and the Macroeconomy - Bank of Canada
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Bank of Canada RSS Feedsen2024-03-29T06:51:49+00:00Understanding Post-COVID Inflation Dynamics
https://www.bankofcanada.ca/2022/12/staff-working-paper-2022-50/
We propose a macroeconomic model with a nonlinear Phillips curve that has a flat slope when inflationary pressures are subdued and steepens when inflationary pressures are elevated. Our model can generate more sizable inflation surges due to cost-push and demand shocks than a standard linearized model when inflation is high.2022-12-13T10:42:51+00:00enUnderstanding Post-COVID Inflation Dynamics2022-12-13Business fluctuations and cyclesCentral bank researchCoronavirus disease (COVID-19)Economic modelsInflation and pricesInflation: costs and benefitsMonetary policyMonetary policy implementationStaff Working Paper 2022-50https://www.bankofcanada.ca/wp-content/uploads/2022/12/swp2022-50.pdfStaff Working Paper 2022-50Martin HardingJesper LindéMathias TrabandtDecember 2022EE3E30E31E32E37E4E44E5E52Stablecoins and Their Risks to Financial Stability
https://www.bankofcanada.ca/2022/11/staff-discussion-paper-2022-20/
What risks could stablecoins pose to the financial system? We argue that the stabilization mechanisms of stablecoins give rise to the risk of confidence runs, which can propagate to broader cryptoasset markets and the traditional financial sector. We also argue that stablecoins can contribute to financial stability risks by facilitating the buildup of leverage and liquidity mismatch in decentralized finance. Such risks cannot be addressed by ensuring the price stability of stablecoins alone. Finally, we explore the potential implications of stablecoins for the current system of bank-intermediated credit and for monetary policy.2022-11-28T14:39:47+00:00frStablecoins and Their Risks to Financial Stability2022-11-28Digital currencies and fintechFinancial institutionsFinancial marketsFinancial stabilityFinancial system regulation and policiesStaff Discussion Paper 2022-20https://www.bankofcanada.ca/wp-content/uploads/2022/11/sdp2022-20.pdfStaff Discussion Paper 2022-20Cameron MacDonaldLaura ZhaoNovember 2022EE4E42E44E5E58GG2G23Sectoral Uncertainty
https://www.bankofcanada.ca/2022/09/staff-working-paper-2022-38/
We propose a new empirical framework that jointly decomposes the conditional variance of economic time series into a common and a sector-specific uncertainty component. We apply our framework to a disaggregated industrial production series for the US economy. We identify unexpected changes in durable goods uncertainty as drivers of downturns, while unexpected hikes in non-durable goods uncertainty are expansionary.2022-09-09T10:36:10+00:00enSectoral Uncertainty2022-09-09Business fluctuations and cyclesEconometric and statistical methodsMonetary policy and uncertaintyStaff Working Paper 2022-38https://www.bankofcanada.ca/wp-content/uploads/2022/09/swp2022-38.pdfSectoral UncertaintyEfrem CastelnuovoKerem TuzcuogluLuis UzedaSeptember 2022CC5C51C55EE3E32E4E44Unregulated Lending, Mortgage Regulations and Monetary Policy
https://www.bankofcanada.ca/2022/06/staff-working-paper-2022-28/
This paper evaluates the effectiveness of macroprudential policies when regulations are uneven across mortgage lender types. We look at credit tightening that results from macroprudential regulations and examine how much of it is counteracted by credit shifting to unregulated lenders. We also study the impact of monetary policy tightening when some lenders are unregulated.2022-06-27T10:05:32+00:00enUnregulated Lending, Mortgage Regulations and Monetary Policy2022-06-27Financial institutionsFinancial system regulation and policiesMonetary policy transmissionStaff Working Paper 2022-28https://www.bankofcanada.ca/wp-content/uploads/2022/06/swp2022-28.pdfStaff Working Paper 2022-28Ugochi EmenoguBrian PetersonJune 2022EE4E44E5E50E52E58GG2G21G23G28Endogenous Liquidity and Capital Reallocation
https://www.bankofcanada.ca/2022/06/staff-working-paper-2022-27/
We study economies where firms acquire capital in primary markets then retrade it in secondary markets after information on idiosyncratic productivity arrives. Our secondary markets incorporate bilateral trade with search, bargaining and liquidity frictions.2022-06-17T09:32:18+00:00enEndogenous Liquidity and Capital Reallocation2022-06-17Business fluctuations and cyclesMonetary policyStaff Working Paper 2022-27https://www.bankofcanada.ca/wp-content/uploads/2022/06/swp2022-27.pdfEndogenous Liquidity and Capital ReallocationWei CuiRandall WrightYu ZhuJune 2022EE2E22E4E44How well can large banks in Canada withstand a severe economic downturn?
https://www.bankofcanada.ca/2022/05/staff-analytical-note-2022-6/
We examine the potential impacts of a severe economic shock on the resilience of major banks in Canada. We find these banks would suffer significant financial losses but nevertheless remain resilient. This underscores the role well-capitalized banks and sound underwriting practices play in supporting economic activity in a downturn.2022-05-24T15:00:17+00:00enHow well can large banks in Canada withstand a severe economic downturn?2022-05-24Financial Intermediaries and the Macroeconomy: Evidence from a High-Frequency Identification
https://www.bankofcanada.ca/2022/05/staff-working-paper-2022-24/
We provide empirical evidence of effects to the aggregate economy from surprises about financial intermediaries’ net worth based on a high-frequency identification strategy. We estimate that news of a 1% decline in intermediaries’ net worth leads to a 0.2%–0.4% decrease in the market value of nonfinancial firms.2022-05-20T15:46:50+00:00enFinancial Intermediaries and the Macroeconomy: Evidence from a High-Frequency Identification2022-05-20Asset pricingBusiness fluctuations and cyclesCredit and credit aggregatesFinancial institutionsFinancial marketsFinancial system regulation and policiesMonetary and financial indicatorsStaff Working Paper 2022-24https://www.bankofcanada.ca/wp-content/uploads/2022/05/swp2022-24.pdfStaff Working Paper 2022-24Pablo OttonelloWenting SongMay 2022EE3E32E4E44E5E51GG0G01G1G12G2G21G23G24G3G32Firm Inattention and the Efficacy of Monetary Policy: A Text-Based Approach
https://www.bankofcanada.ca/2022/01/staff-working-paper-2022-3/
How much attention do firms pay to macroeconomic news? Through a novel text-based measure, two facts emerge. First, attention is polarized. Most firms either never or always pay attention to economic conditions. Second, it is countercyclical. During recessions, more firms pay attention, and firms pay greater attention to macroeconomic news.2022-01-11T10:36:34+00:00enFirm Inattention and the Efficacy of Monetary Policy: A Text-Based Approach2022-01-11Business fluctuations and cyclesInflation and pricesMonetary policyStaff Working Paper 2022-3https://www.bankofcanada.ca/wp-content/uploads/2022/01/swp2022-3.pdfStaff Working Paper 2022-3Wenting SongSamuel SternJanuary 2022DD8D83EE4E44E5E52