E - Macroeconomics and Monetary Economics
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A Behavioral New Keynesian Model of a Small Open Economy Under Limited Foresight
This paper studies exchange rate dynamics by incorporating bounded rationality, that is, limited foresight, in a small open-economy model. This behavior of limited foresight helps explain several observations and puzzles in the data of exchange rate movements. -
Digitalization: Implications for Monetary Policy
We explore the implications of digitalization for monetary policy, both in terms of how monetary policy affects the economy and in terms of data analysis and communication with the public. -
Digitalization: Productivity
We examine the relationship between digitalization and productivity, the factors that influence this relationship, and how digitalization’s effect on productivity could change firm behaviour. -
Unmet Payment Needs and a Central Bank Digital Currency
We discuss the payment habits of Canadians both in the current payment environment and in a hypothetical cashless environment. -
The contribution of firm profits to the recent rise in inflation
We measure the contribution to inflation from the growth in markups of Canadian firms. The dynamics of inflation and markups suggest that changes in markups could account for less than one-tenth of inflation in 2021. Further, they suggest that peak inflation was driven primarily by changes in the costs of firms. -
Is Money Essential? An Experimental Approach
Monetary theory says that money is essential if it helps to achieve better incentive-feasible outcomes. We test this in the laboratory. -
It takes a panel to predict the future: What the stock market says about future economic growth in Canada
Valuation ratios in the Canadian stock market can help reveal investors’ expectations about future economic growth because the impact of economic growth on valuation ratios can vary across industries. We find that this variation helps produce accurate forecasts of future growth of real gross domestic product in Canada. The forecasts from our model declined by just over 3 percentage points between January 2022 and February 2023—a period when the Bank of Canada rapidly increased the overnight rate. As well, we find that interest-rate-sensitive industries had an outsized contribution to this expected slowdown in growth. -
Cryptoasset Ownership and Use in Canada: An Update for 2022
We find that Bitcoin ownership declined from 13% in 2021 to 10% in 2022. This drop occurred against a background of steep price declines and an increasingly tight regulatory atmosphere. -
Global Demand and Supply Sentiment: Evidence from Earnings Calls
This paper quantifies global demand, supply and uncertainty shocks and compares two major global recessions: the 2008–09 Great Recession and the COVID-19 pandemic. We use two alternate approaches to decompose economic shocks: text mining techniques on earnings calls transcripts and a structural Bayesian vector autoregression model.