Assessing the US and Canadian neutral rates: 2025 update
We assess both the US and Canadian nominal neutral rates to be in the range of 2.25% to 3.25%, unchanged from the range assessed in 2024.
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Latest research
Assessing global potential output growth: April 2025
Staff Analytical Note 2025-15
Samuel Boulanger,
Raheeb Dastagir,
Daniel de Munnik,
Eshini Ekanayake,
Kun Mo,
Walter Muiruri,
Faiza Noor,
Sabreena Obaid,
Louis Poirier
This note presents the annual update of Bank of Canada staff estimates for growth in global potential output. These estimates served as key inputs to the analysis supporting the April 2025 Monetary Policy Report.
Content Type(s):
Staff research,
Staff analytical notes
Research Topic(s):
Potential output,
Productivity
JEL Code(s):
E,
E1,
E2,
F,
F0,
F1,
O,
O3,
O33,
O4
Potential output in Canada: 2025 assessment
Staff Analytical Note 2025-14
Selam Abraham,
Dany Brouillette,
Alex Chernoff,
Christopher Hajzler,
Stéphanie Houle,
Mark Kim,
Temel Taskin
We explore two scenarios for potential output growth to gain insights into the economic consequences associated with different possible trade policies. Scenario 1 includes limited US tariffs on Canadian exports. Scenario 2 adds a permanent, broad-based 25% increase in US tariffs on imports from all countries excluding Canada and Mexico.
Content Type(s):
Staff research,
Staff analytical notes
Research Topic(s):
Economic models,
Labour markets,
Monetary policy,
Potential output,
Productivity
JEL Code(s):
E,
E2,
E3,
E4,
E5
The Optimum Quantity of Central Bank Reserves
Staff Working Paper 2025-15
Jonathan Witmer
This paper analyzes the optimal quantity of central bank reserves in an economy where reserves and other financial assets provide liquidity benefits. Using a static model, I derive a constrained Friedman rule that characterizes the socially optimal level of reserves, demonstrating that this quantity is neither necessarily large nor small but depends on the marginal benefits of reserves relative to alternative safe assets.
Content Type(s):
Staff research,
Staff working papers
Research Topic(s):
Financial institutions,
Financial markets,
Financial system regulation and policies,
Monetary policy implementation
JEL Code(s):
E,
E4,
E41,
E42,
E5,
E58,
G,
G2,
G21,
G28
Partial Identification of Heteroskedastic Structural Vector Autoregressions: Theory and Bayesian Inference
Staff Working Paper 2025-14
Helmut Lütkepohl,
Fei Shang,
Luis Uzeda,
Tomasz Woźniak
We consider structural vector autoregressions that are identified through stochastic volatility. Our analysis focuses on whether a particular structural shock can be identified through heteroskedasticity without imposing any sign or exclusion restrictions.
Content Type(s):
Staff research,
Staff working papers
Research Topic(s):
Econometric and statistical methods,
Fiscal policy
JEL Code(s):
C,
C1,
C11,
C12,
C3,
C32,
E,
E6,
E62