E3 - Prices, Business Fluctuations, and Cycles
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How Do Agents Form Macroeconomic Expectations? Evidence from Inflation Uncertainty
The uncertainty regarding inflation that is observed in density forecasts of households and professionals helps macroeconomists understand the formation mechanism of inflation expectations. Shocks to inflation take time to be perceived by all agents in the economy, and such rigidity is lower in a high-inflation environment. -
Making It Real: Bringing Research Models into Central Bank Projections
Macroeconomic projections and risk analyses play an important role in guiding monetary policy decisions. Models are integral to this process. This paper discusses how the Bank of Canada brings research models and lessons learned from those models into the central bank projection environment. -
Assessing the effects of higher immigration on the Canadian economy and inflation
We assess the complex macroeconomic implications of Canada’s recent population increases. We find that newcomers significantly boost the non-inflationary, potential growth of the economy, but existing imbalances in the housing sector may be exacerbated. Greater housing supply is needed to complement the long-term economic benefits of population growth. -
International Portfolio Rebalancing and Fiscal Policy Spillovers
We evaluate, both empirically and theoretically, the spillover effects that debt-financed fiscal policy interventions of the United States have on other economies. We consider a two-country model with international portfolio rebalancing effects. We show that US fiscal expansions would increase global long-term rates and hinder economic activity in the rest of the world. -
Digitalization: Prices of Goods and Services
This paper outlines and assesses the various channels through which digitalization can affect prices of goods and services. -
Uncovering the Differences Among Displaced Workers: Evidence from Canadian Job Separation Records
We revisit the measurement of the sources and consequences of job displacement using Canadian job separation records. -
Variations in Pass-Through from Global Agricultural Commodity Prices to Domestic Food Inflation
This paper examines factors that affect the transmission of fluctuations in global agricultural commodity prices to domestic food inflation. -
Should Banks Be Worried About Dividend Restrictions?
A regulator would want to restrict dividends to force banks to rebuild capital during a crisis. But such a policy is not time-consistent. A time-consistent policy would let banks gradually rebuild capital and pay dividends even when their equity remains below pre-crisis levels. -
The Macroeconomic Effects of Debt Relief Policies During Recessions
A large-scale reduction in mortgage principal can strengthen a recovery, support house prices and lower foreclosures. The nature of the intervention shapes its impact, which rests on how resources are redistributed across households. The availability of bankruptcy on unsecured debt changes the response to large-scale mortgage relief by reducing precautionary savings.