Stefano Gnocchi is the Senior Research Director in the Canadian Economic Analysis (CEA) Department. His research interests include macroeconomics, monetary economics, and monetary and fiscal policy. Prior to joining the Bank, Stefano held academic positions at the Universitat Autonoma de Barcelona and the Barcelona Graduate School of Economics. He holds a Ph.D. in Economics from Universitat Pompeu Fabra.
This paper shows that consumption activities toward which households reallocate more time in recessions see larger expenditure declines, revealing a systematic link between time-use and expenditure cyclicality. A two-sector New Keynesian model shows this time-expenditure substitution explains roughly forty percent of consumption's response to monetary policy shocks.
Rising volatility and structural shifts—deglobalization, climate risks, and AI—are reshaping inflation and policy trade-offs. Evidence suggests central banks can accommodate supply-driven inflation while balancing inflation and output, as long as expectations stay anchored and policy reflects shock size, persistence, and broader economic conditions.
We explain how the Bank of Canada’s policy models capture the trade-off between output and inflation in Canada. We provide new estimates of the trade-off and contrast them with those in the Bank’s macroeconomic models.
We estimate the effects of economic uncertainty on time use and discuss its macroeconomic implications. We develop a model to demonstrate that substitution between market and non-market work provides an additional insurance margin to households, weakening precautionary savings and labour supply and lowering aggregate demand, ultimately amplifying the contractionary effects of uncertainty.
We add downward nominal wage rigidity to a standard New Keynesian model with sticky prices and wages, where the zero lower bound on nominal interest rates is allowed to bind. We find that wage rigidity not only reduces the frequency of zero bound episodes but also mitigates the severity of corresponding recessions.
The article examines the extent of downward nominal wage rigidity in Canada and its implications for monetary policy. The authors ask whether its existence is a sufficient argument for a higher inflation target if concerns about the effective lower bound are adequately addressed.
"Do Labor Market Institutions Matter for Business Cycles?", (with Andresa Lagerborg and Evi Pappa), Journal of Economic Dynamics and Control, Vol. 51, pages 299-317, February 2015.
"Monetary Commitment and Fiscal Discretion: The Optimal Policy Mix", American Economic Journal: Macroeconomics, Vol. 5, Issue 2, pages 187-216, April 2013.
"Non-Atomistic Wage Setters and Monetary Policy in a New-Keynesian Framework", Journal of Money, Credit and Banking, Vol. 41, Issue 8, pages 1613-1630, December 2009.
Other
Working papers
"Discretionary Fiscal Policy and Optimal Monetary Policy in a Currency Area", Working Paper No. 602, Dipartimento di Scienze Economiche Bologna, 2007.
"Optimal simple monetary policy rules and non-atomistic wage setters in a New-Keynesian framework", Working Paper No. 690, European Central Bank, 2006.
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