Posts

• December 31, 2024

  Quarterly Research Update – 2024 Q4

  This newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

  Content Type(s): Staff research, Research newsletters
• December 23, 2024

  Summary of Governing Council deliberations: Fixed announcement date of December 11, 2024

  This is an account of the deliberations of the Bank of Canada’s Governing Council leading to the monetary policy decision on December 11, 2024.

  Content Type(s): Publications, Summary of deliberations
• December 23, 2024

  Release of the Bank of Canada’s summary of deliberations

  On Monday, December 23, 2024, the Bank of Canada will publish a summary of the deliberations that took place ahead of its interest rate decision on December 11, 2024.

  Content Type(s): Press, Media advisories

• Interaction of Macroprudential and Monetary Policies: Practice Ahead of Theory

  Staff Discussion Paper 2024-18 Thibaut Duprey, Yaz Terajima, Jing Yang

  We draw on the Canadian experience to examine how monetary and macroprudential policies interact and possibly complement each other in achieving their respective price and financial stability objectives.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Financial stability, Monetary policy JEL Code(s): E, E3, E37, E5, E52, E58, E6, E61, G, G0, G01, G2, G21, G28

• CBDC in the Market for Payments at the Point of Sale: Equilibrium Impact and Incumbent Responses

  Staff Working Paper 2024-52 Walter Engert, Oleksandr Shcherbakov, André Stenzel

  We simulate introducing a central bank digital currency (CBDC) and consider consumer adoption, merchant acceptance and usage at the point of sale. Modest adoption frictions significantly inhibit CBDC market penetration along all three dimensions. Incumbent responses to restore pre-CBDC market shares are moderate to small and further reduce the impact of a CBDC.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Bank notes, Digital currencies and fintech, Econometric and statistical methods, Financial services JEL Code(s): C, C5, C51, D, D1, D12, E, E4, E42, L, L1, L14, L5, L52
• December 20, 2024

  What is a central bank?

  A central bank works to promote a country’s economic stability and its citizens’ financial well-being.

  Content Type(s): Explainers

• Bouncing Back: How Mothballing Curbs Prices

  Staff Working Paper 2024-51 Thibaut Duprey, Artur Kotlicki, Daniel E. Rigobon, Philip Schnattinger

  We investigate the macroeconomic impacts of mothballed businesses—those that closed temporarily—on sectoral equilibrium prices after a negative demand shock. Our results suggest that pandemic fiscal support for temporary closures may have eased inflationary pressures.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Firm dynamics, Fiscal policy, Inflation and prices JEL Code(s): C, C5, C55, C8, C81, D, D2, D22, E, E3, E32

• The impact of a central bank digital currency on payments at the point of sale

  Staff Analytical Note 2024-27 Walter Engert, Oleksandr Shcherbakov, André Stenzel

  We simulate the impact of a central bank digital currency (CBDC) on consumer adoption, merchant acceptance and use of different payment methods. Modest frictions that deter consumer adoption of a CBDC inhibit its market penetration. Minor pricing responses by financial institutions and payment service providers further reduce the impact of a CBDC.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Bank notes, Digital currencies and fintech, Econometric and statistical methods, Financial services JEL Code(s): C, C5, C51, D, D1, D12, E, E4, E42, L, L1, L14, L5, L52

• Consumer Search, Productivity Heterogeneity, Prices, Markups, and Pass-through: Theory and Estimation

  Staff Working Paper 2024-50 Alex Chernoff, Allen Head, Beverly Lapham

  We develop and estimate a search model in which identical consumers trade with price-setting firms that differ in productivity. We use the estimated model to characterize the qualitative and quantitative differences in prices and markups across firms. We explore how individual firms respond to changes in cost and demand and how they pass these through to their prices and markup.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation and prices, Service sector JEL Code(s): E, E3, E31, L, L1, L16

• The Distributional Origins of the Canada-US GDP and Labour Productivity Gaps

  Staff Working Paper 2024-49 James (Jim) C. MacGee, Joel Rodrigue

  We find the top 10% of the income distribution accounts for three-quarters of the gap in GDP per adult between Canada and the United States. The large gaps in income for high-income earners help distinguish between alternative explanations of this persistent gap in GDP per adult.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Productivity JEL Code(s): D, D3, D31, E, E2, E24, J, J2, J24, J6, J61, N, N1, N12, O, O4, O47, O5, O51