E - Macroeconomics and Monetary Economics

• Finding the balance—measuring risks to inflation and to GDP growth

  Staff Analytical Note 2023-18 Bruno Feunou, James Kyeong

  Using our new quantitative tool, we show how the risks to the inflation and growth outlooks have evolved over the course of 2023.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Business fluctuations and cycles, Econometric and statistical methods JEL Code(s): C, C3, C32, C5, C58, E, E4, E44, G, G1, G17

• Supporting the Transition to Net-Zero Emissions: The Evolving Role of Central Banks

  Staff Discussion Paper 2023-31 Karen McGuinness

  While climate change was largely tackled by government policies in the past, central banks are increasingly grappling with the risks climate change poses. They are evaluating their operational policies to reflect these risks and the transition to a net-zero economy. This paper explores the trade-offs and considerations central banks face.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Central bank research, Climate change, Financial markets JEL Code(s): D, D5, D53, E, E5, E58, E6, E63, G, G3, G32, Q, Q5, Q54

• Central Bank Crisis Interventions: A Review of the Recent Literature on Potential Costs

  Staff Discussion Paper 2023-30 Patrick Aldridge, David Cimon, Rishi Vala

  Central banks’ actions to stabilize financial markets and implement monetary policy during crises may come with costs and side effects. We provide a literature review of these costs and discuss measures that may mitigate the negative impacts of crisis actions.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Central bank research, Financial institutions, Financial markets, Financial stability, Lender of last resort JEL Code(s): E, E5, E58, G, G1, G10, G2, G20

• Making It Real: Bringing Research Models into Central Bank Projections

  Staff Discussion Paper 2023-29 Marc-André Gosselin, Sharon Kozicki

  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.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Economic models, Monetary policy JEL Code(s): C, C3, C32, C5, C51, E, E3, E37, E4, E47, E5, E52

• Assessing the effects of higher immigration on the Canadian economy and inflation

  Staff Analytical Note 2023-17 Julien Champagne, Erik Ens, Xing Guo, Olena Kostyshyna, Alexander Lam, Corinne Luu, Sarah Miller, Patrick Sabourin, Joshua Slive, Temel Taskin, Jaime Trujillo, Shu Lin Wee

  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.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Domestic demand and components, Housing, Inflation and prices, Labour markets, Potential output, Recent economic and financial developments JEL Code(s): A, A1, A10, E, E2, E20, E3, E31, J, J1, J11, J15

• International Portfolio Rebalancing and Fiscal Policy Spillovers

  Staff Working Paper 2023-56 Sami Alpanda, Uluc Aysun, Serdar Kabaca

  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.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Fiscal policy, International topics JEL Code(s): E, E3, E32, E6, E62, F, F4, F41, F44

• Digitalization: Prices of Goods and Services

  Staff Discussion Paper 2023-27 Vivian Chu, Tatjana Dahlhaus, Christopher Hajzler

  This paper outlines and assesses the various channels through which digitalization can affect prices of goods and services.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Digitalization, Inflation and prices, Market structure and pricing, Monetary policy JEL Code(s): D, D2, E, E3, E31, E5, E52, L, L1, L11

• The Heterogeneous Impacts of Job Displacement: Evidence from Canadian Job Separation Records

  Staff Working Paper 2023-55 Serdar Birinci, Youngmin Park, Kurt See

  When estimating earnings losses upon job separations, existing strategies focus on separations in mass layoffs to distinguish involuntary separations from voluntary separations. We revisit the measurement of the sources and consequences of involuntary job separations using Canadian job separation records.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Labour markets, Potential output, Productivity JEL Code(s): E, E2, E24, E3, E32, J, J3, J31, J6, J63, J65

• Borrow Now, Pay Even Later: A Quantitative Analysis of Student Debt Payment Plans

  Staff Working Paper 2023-54 Michael Boutros, Nuno Clara, Francisco Gomes

  We investigate alternative student debt contracts that defer payments and ease the burden of student loans on US households by preserving disposable income early in borrowers’ lives. Our model shows substantial welfare gains from these contracts relative to existing plans and gains similar to the Biden administration's proposals but with a significantly lower cost.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Asset pricing, Economic models, Financial markets, Labour markets, Market structure and pricing JEL Code(s): E, E2, G, G5, H, H3

• Estimating the Appropriate Quantity of Settlement Balances in a Floor System

  Staff Discussion Paper 2023-26 Narayan Bulusu, Matthew McNeely, Kaetlynd McRae, Jonathan Witmer

  This paper presents two complementary approaches to estimating the appropriate quantity of settlement balances needed to effectively operate monetary policy under a floor system in Canada.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Financial institutions, Financial markets, Financial system regulation and policies, Monetary policy implementation, Payment clearing and settlement systems JEL Code(s): E, E4, E41, E42, E5, E52, E58, G, G2, G21, G28