F - International Economics

• International Economic Sanctions and Third-Country Effects

  Staff Working Paper 2023-46 Fabio Ghironi, Daisoon Kim, Galip Kemal Ozhan

  We study the transmission and third-country effects of international sanctions. A sanctioned country’s losses are mitigated, and the sanctioning country’s losses amplified, if a third country does not join the sanctions, but the third country benefits from not joining.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Exchange rates, International topics JEL Code(s): F, F3, F31, F4, F41, F42, F5, F51

• A Behavioral New Keynesian Model of a Small Open Economy Under Limited Foresight

  Staff Working Paper 2023-44 Seunghoon Na, Yinxi Xie

  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.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Exchange rates, International topics, Monetary policy transmission JEL Code(s): E, E4, E43, E7, E70, F, F3, F31, F4, F41

• BoC–BoE Sovereign Default Database: What’s new in 2023?

  Staff Analytical Note 2023-10 David Beers, Obiageri Ndukwe, Karim McDaniels, Alex Charron

  The BoC–BoE database of sovereign debt defaults, published and updated annually by the Bank of Canada and the Bank of England, provides comprehensive estimates of stocks of government obligations in default. The 2023 edition includes a new section about the characteristics of sovereign defaults and provides new visuals showing regional debt in default.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Debt management, Development economics, Financial stability, International financial markets JEL Code(s): F, F3, F34, G, G1, G10, G14, G15

• BoC–BoE Sovereign Default Database: Appendix and References

  Technical Report No. 125 David Beers, Obiageri Ndukwe, Alex Charron

  Since 2014, the Bank of Canada (BoC) has maintained a comprehensive database of sovereign defaults to systematically measure and aggregate the nominal value of the different types of sovereign government debt in default. The database is posted on the BoC’s website and is updated annually in partnership with the Bank of England (BoE).

  Content Type(s): Staff research, Technical reports Topic(s): Debt management, Development economics, Financial stability, International financial markets JEL Code(s): F, F3, F34, G, G1, G10, G14, G15

• BoC–BoE Sovereign Default Database: Methodology and Assumptions

  Technical Report No. 124 David Beers, Obiageri Ndukwe, Alex Charron

  The Bank of Canada (BoC), in partnership with the Bank of England (BoE), developed a comprehensive database of sovereign defaults in 2014. The database is posted on the Bank of Canada’s website and updated annually. The BoC–BoE database draws on datasets published by various public and private sector sources. It combines elements of these, together with new information, to develop comprehensive estimates of stocks of government obligations in default.

  Content Type(s): Staff research, Technical reports Topic(s): Debt management, Development economics, Financial stability, International financial markets JEL Code(s): F, F3, F34, G, G1, G10, G14, G15

• The Macroeconomic Effects of Portfolio Equity Inflows

  Staff Working Paper 2023-31 Nick Sander

  I provide evidence that portfolio equity inflows can have expansionary effects on GDP and inflation if not offset by monetary policy. I use a shift-share instrument to estimate equity inflows based on plausibly exogenous timing of inflows into mutual funds with heterogeneous country portfolios.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, International financial markets, International topics, Monetary policy JEL Code(s): E, E3, E32, F, F3, F32, F4, F44

• An Investigation into the Effects of Border Carbon Adjustments on the Canadian Economy

  Staff Working Paper 2023-27 Y.-H. Henry Chen, Hossein Hosseini Jebeli, Craig Johnston, Sergey Paltsev, Marie-Christine Tremblay

  We examine the economic implications of border carbon adjustments (BCAs) for Canada. We find that, BCAs, in the form of import tariffs, reduce Canada’s carbon leakage and improve its competitiveness when Canada is part of a broad coalition of BCA-implementing countries. Welfare also improves when tariff revenues are transferred to households.

  Content Type(s): Staff research, Staff working papers Topic(s): Climate change, International topics, Trade integration JEL Code(s): C, C6, C68, F, F1, H, H2, Q, Q3, Q37, Q5

• Assessing global potential output growth and the US neutral rate: April 2023

  Staff Analytical Note 2023-5 Salma Ahmed, Aviel Avshalumov, Tania Chaar, Eshini Ekanayake, Helen Lao, Louis Poirier, Jenna Rolland-Mills, Argyn Toktamyssov, Lin Xiang

  We expect global potential output growth to increase from 2.5% in 2022 to 2.8% by 2026. Compared with the April 2022 staff assessment, global potential output growth is marginally slower. The current range for the US neutral rate is 2% to 3%, unchanged from the last annual assessment.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Interest rates, Monetary policy, Potential output, Productivity JEL Code(s): E, E1, E2, E4, E5, F, F0, O, O4

• Trade and Diffusion of Embodied Technology: An Empirical Analysis

  Staff Working Paper 2023-21 Stephen Ayerst, Faisal Ibrahim, Gaelan MacKenzie, Swapnika Rachapalli

  Using data from patents, citations, inter-sectoral sales and customs, we examine the international diffusion of technology through imports of sectoral knowledge and production inputs. We develop an instrumental variable strategy to identify the causal effects of technology embodied in imports on innovation and diffusion outcomes.

  Content Type(s): Staff research, Staff working papers Topic(s): Development economics, International topics, Productivity, Trade integration JEL Code(s): F, F1, F14, F6, F61, O, O1, O19, O3, O31, O33

• The Canadian Neutral Rate of Interest through the Lens of an Overlapping-Generations Model

  Staff Discussion Paper 2023-5 Martin Kuncl, Dmitry Matveev

  We use a small open economy model with overlapping generations to evaluate secular dynamics of the neutral rate in Canada from 1980 to 2018. We find that changes in both foreign and domestic factors resulted in a protracted decline in the neutral rate.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Economic models, Interest rates, Monetary policy JEL Code(s): E, E2, E21, E22, E4, E43, E5, E50, E52, E58, F, F4, F41