Isabelle Salle is a Senior Economist in the Market Risks and Vulnerabilities Division of the Bank of Canada. Her research consists in developing models of the economy that incorporate heterogeneity and bounded rationality in the agents' behaviors and expectation formation process. She has been using lab experiments to gain empirical insights on those behaviors. The resulting models include agent-based models and learning models with heterogeneous and interacting agents. She has also used those models for the analysis of macroeconomic questions, in particular monetary and fiscal policy design, central bank communication, and prudential policy and financial regulation.

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Staff working papers

The COVID-19 Consumption Game-Changer: Evidence from a Large-Scale Multi-Country Survey

A multi-country consumer survey investigates why and how much households decreased their consumption in five key sectors after pandemic-related restrictions were lifted in Europe in July 2020. Beyond infection risk and precautionary saving motives, households also reported not missing some consumption items, which may indicate preference shifts and structural changes in the post-COVID-19 economy.

What to Target? Insights from a Lab Experiment

Staff Working Paper 2021-53 Isabelle Salle
In a laboratory experiment, we ask participants to predict inflation using three different policy regimes: inflation targeting—with and without greater communication of the target—average inflation targeting and price level targeting. We use participants’ predictions to compare the level and stability of inflation under each regime.

Ten Isn’t Large! Group Size and Coordination in a Large-Scale Experiment

Economic activities typically involve coordination among a large number of agents. These agents have to anticipate what other agents think before making their own decisions.
Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, Financial stability JEL Code(s): C, C9, C92, D, D8, D83, D9, D90, G, G2, G20

Social Learning and Monetary Policy at the Effective Lower Bound

This research develops a model in which the economy is directly influenced by how pessimistic or optimistic economic agents are about the future. The agents may hold different views and update them as new economic data become available.

Are Long-Horizon Expectations (De-)Stabilizing? Theory and Experiments

Staff Working Paper 2019-27 George Evans, Cars Hommes, Isabelle Salle, Bruce McGough
Most models in finance assume that agents make trading plans over the infinite future. We consider instead that they are boundedly rational and may only form forecasts over a limited horizon.

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Journal publications

Refereed journals

  • HOMMES Cars, MASSARO Domenico & SALLE Isabelle, Monetary and Fiscal Policy Design at the Zero Lower Bound ? Evidence from the lab, Economic Inquiry, Vol. 57, No. 2, April 2019, 1120-1140.
  • SALLE Isabelle & SEPPECHER, Pascal, Stabilizing an Unstable Complex Economy ? On the limitations of simple rules, 2018, Journal of Economic Dynamics and Control, 91, 289-317.
  • SEPPECHER, Pascal, SALLE, Isabelle and LAVOIE, Marc, What drives markups? Evolutionary pricing in an agent-based stock-ow consistent macroeconomic model, forthcoming in Industrial and Corporate Change.
  • SALLE Isabelle, SEPPECHER, Pascal and LANG, Dany, Is the market really a good teacher? Market selection, collective adaptation and _nancial instability, forthcoming in Journal of Evolutionary Economics. Must-Read on Brad DeLong's blog:
  • SALLE Isabelle, SENEGAS, Marc-Alexandre, YILDIZOGLU, Murat, How transparent should a Central Bank be ? an ABM assessment", 2017, forthcoming in the Journal of Evolutionary Economics.
  • SALLE Isabelle, YILDIZOGLU Murat, ZUMPE Martin & SENEGAS, Marc-Alexandre, Coordination through social learning in a general equilibrium model, 2017, Journal of Economic Behavior & Organization, Volume 141, 2017, Pages 64-82.
  • SALLE Isabelle & SEPPECHER Pascal, Social learning about consumption, Macroeconomic Dynamics, 2016, Vol. 20, No. 16, pp. 1795-1825.
  • SALLE Isabelle, Modeling expectations in agent-based models { An application to central bank's communication and monetary policy, Economic Modelling, 2015, Vol. 46, pp. 130-141.
  • SEPPECHER Pascal & SALLE Isabelle, Deleveraging crises and deep recessions { a behavioural approach, Applied Economics, 2015, Vol. 47 (34-35), pp. 3771-3790.
  • SALLE Isabelle & YILDIZOGLU, Murat, E_cient Sampling and Metamodeling in Computational Economic Models, Computational Economics, 2014, Vol. 44, No. 4, pp. 507-536.
  • YILDIZOGLU Murat, SENEGAS Marc-Alexandre, SALLE Isabelle, ZUMPE Martin, Learning the optimal bu_er-stock consumption rule of Carroll, Macroeconomic Dynamics, 2014, Vol. 18, No. 4, pp.727-752.
  • SALLE, Isabelle, Ciblage de l'ination, Transparence et Anticipations {une revue de la litt_erature r_ecente, Revue d'Economie Politique, 2013, Vol. 123, No. 5, pp. 697-736.
  • SALLE Isabelle, YILDIZOGLU, Murat, SENEGAS, Marc-Alexandre, "Ination Targeting in a Learning Economy: an ABM Perspective", Economic Modelling, 2013, 34, pp.114-128.