José Dorich - Latest

• The Neutral Rate in Canada: 2019 Update

  Staff Analytical Note 2019-11 Thomas J. Carter, Xin Scott Chen, José Dorich

  This note provides an update on Bank of Canada staff’s assessment of the Canadian neutral rate. The neutral rate is the policy rate needed to keep output at its potential level and inflation at target once the effects of any cyclical shocks have dissipated. This medium- to long-run concept serves as a benchmark for gauging the degree of monetary stimulus provided by a given policy setting.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Economic models, Interest rates, Monetary policy JEL Code(s): E, E4, E40, E43, E5, E50, E52, E58, F, F4, F41
• January 31, 2019

  Making cents of wages

  

  Russell Barnett, José Dorich

  Ever wonder how your wages are determined? You’re not the only one who cares about your wages. At the Bank of Canada, we care about them a lot too.

  Content Type(s): Publications, The Economy, Plain and Simple Topic(s): Business fluctuations and cycles, Firm dynamics, Labour markets, Productivity

• Weakness in Non-Commodity Exports: Demand versus Supply Factors

  Staff Analytical Note 2018-28 José Dorich, Vadym Lepetyuk, Jonathan Swarbrick

  We use the Terms-of-Trade Economic Model (ToTEM) to conduct demand- and supply-driven simulations, both of which deliver weakness in Canadian non-commodity exports relative to foreign activity in line with recent data.

  Content Type(s): Staff research, Staff analytical notes Topic(s): International topics, Monetary policy, Recent economic and financial developments, Trade integration JEL Code(s): E, E5, E52, F, F1, F10, F14, F17

• What Is Restraining Non-Energy Export Growth?

  Staff Analytical Note 2018-25 Dany Brouillette, José Dorich, Chris D'Souza, Adrienne Gagnon, Claudia Godbout

  This note summarizes the key findings from Bank of Canada staff analytical work examining the reasons for the recent weakness in Canadian non-energy exports. Canada steadily lost market share in US non-energy imports between 2002 and 2017, mostly reflecting continued and broad-based competitiveness losses.

  Content Type(s): Staff research, Staff analytical notes Topic(s): International topics, Monetary policy, Recent economic and financial developments, Trade integration JEL Code(s): E, E5, E52, F, F1, F10, F14, F17

• The Neutral Rate in Canada: 2018 Estimates

  Staff Analytical Note 2018-22 Xin Scott Chen, José Dorich

  The neutral nominal policy rate serves as a benchmark for assessing the degree of monetary stimulus and provides a medium- to long-run anchor for the policy rate. Since quantitative measures of the neutral rate are subject to considerable uncertainty, Bank staff rely on four different approaches to estimate the Canadian neutral rate.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Economic models, Interest rates, Monetary policy JEL Code(s): E, E4, E40, E43, E5, E50, E52, E58, F, F4, F41

• Could a Higher Inflation Target Enhance Macroeconomic Stability?

  Staff Working Paper 2018-17 José Dorich, Nicholas Labelle, Vadym Lepetyuk, Rhys R. Mendes

  Recent international experience with the effective lower bound on nominal interest rates has rekindled interest in the benefits of inflation targets above 2 per cent. We evaluate whether an increase in the inflation target to 3 or 4 per cent could improve macroeconomic stability in the Canadian economy.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Inflation targets, Monetary policy framework JEL Code(s): E, E3, E32, E37, E4, E43, E5, E52
• November 16, 2017

  An Update on the Neutral Rate of Interest

  Bank of Canada Review - Autumn 2017 José Dorich, Abeer Reza, Subrata Sarker

  The neutral rate serves as a benchmark for measuring monetary stimulus and provides a medium- to long-run anchor for the real policy rate. Global neutral rate estimates have been falling over the past few decades. Factors such as population aging, high corporate savings, and low trend productivity growth are likely to continue supporting a low global neutral rate. These global factors as well as domestic factors are exerting downward pres-sure on the Canadian real neutral rate, which is estimated to be between 0.5 to 1.5 per cent. This low neutral rate has important implications for monetary policy and financial stability.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Interest rates, International topics, Potential output, Recent economic and financial developments JEL Code(s): E, E4, E43, E5, E52, E58, F, F0, F01, F4, F43, O, O4

• ToTEM II: An Updated Version of the Bank of Canada’s Quarterly Projection Model

  Technical Report No. 100 José Dorich, Michael K. Johnston, Rhys R. Mendes, Stephen Murchison, Yang Zhang

  This report provides a detailed technical description of an updated version of the Terms-of-Trade Economic Model (ToTEM II), which replaced ToTEM (Murchison and Rennison 2006) in June 2011 as the Bank of Canada’s quarterly projection model for Canada.

  Content Type(s): Staff research, Technical reports Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): E, E1, E17, E2, E20, E3, E30, E4, E40, E5, E50, F, F4, F41
• August 18, 2011

  Introducing Multiple Interest rates in ToTEM

  Bank of Canada Review - Summer 2011 José Dorich, Rhys R. Mendes, Yang Zhang

  This article describes changes to the structure of ToTEM—the Bank of Canada’s main model for projection and policy analysis—that allow an independent role for long-term interest rates, as well as for the risk spreads that lead to differences in the interest rates faced by households, firms and the government. These changes broaden the range of policy questions that the model can address and improve its ability to explain data. The authors use the model to simulate the effects of shocks to the risk spreads on interest rates similar to those that occurred during the recent financial crisis. They also use the model to assess the macroeconomic impact of higher requirements for bank capital and liquidity.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Economic models, Financial system regulation and policies, Interest rates

• Resurrecting the Role of Real Money Balance Effects

  Staff Working Paper 2009-24 José Dorich

  I present a structural econometric analysis supporting the hypothesis that money is still relevant for shaping inflation and output dynamics in the United States. In particular, I find that real money balance effects are quantitatively important, although smaller than they used to be in the early postwar period.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Monetary aggregates, Monetary policy transmission JEL Code(s): E, E3, E31, E32, E5, E52