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66
result(s)
Communicating Inflation Uncertainty and Household Expectations
Staff Working Paper 2023-63
Olena Kostyshyna,
Luba Petersen
We examine the value of direct communication to households about inflation and the uncertainty around inflation statistics. All types of information about inflation are effective at immediately managing inflation expectations, with information about outlooks being more effective and relevant than that about recent inflation and Bank targets.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Central bank research,
Credibility,
Inflation and prices,
Inflation targets,
Monetary policy and uncertainty,
Monetary policy communications
JEL Code(s):
C,
C9,
C93,
D,
D8,
D84,
E,
E5,
E59,
E7
Perceived versus Calibrated Income Risks in Heterogeneous-Agent Consumption Models
Staff Working Paper 2023-59
Tao Wang
Perceived income risks reported in a survey of consumer expectations are more heterogeneous and, on average, lower than indirectly calibrated risks based on panel data. They prove to be one explanation for why a large fraction of households hold very little liquid savings and why accumulated wealth is widely unequal across households.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Monetary policy,
Monetary policy and uncertainty
JEL Code(s):
D,
D1,
D14,
E,
E2,
E21,
E7,
E71,
G,
G5,
G51
A Blueprint for the Fourth Generation of Bank of Canada Projection and Policy Analysis Models
Staff Discussion Paper 2023-23
Donald Coletti
The fourth generation of Bank of Canada projection and policy analysis models seeks to improve our understanding of inflation dynamics, the supply side of the economy and the underlying risks faced by policy-makers coming from uncertainty about how the economy functions.
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Economic models,
Inflation and prices,
Labour markets,
Monetary policy and uncertainty
JEL Code(s):
C,
C5,
C50,
C51,
C52,
C53,
C54,
C55
Tattle-tails: Gauging downside risks using option prices
Staff Analytical Note 2023-13
Greg Adams,
Maksym Tupis
Options markets offer unique insights into the changing risks different assets face, which helps us better understand the broader risks to the Canadian economy. We show how option prices help reveal that investors did not anticipate large downside risks to either major Canadian banks or economic growth during the March 2023 financial sector system stress, a period when policy-makers and investors were unsure of what the future held for Canada’s economy.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Financial markets,
Monetary policy and uncertainty,
Recent economic and financial developments
JEL Code(s):
E,
E4,
E44,
E5,
E52
Time Use and Macroeconomic Uncertainty
Staff Working Paper 2023-29
Matteo Cacciatore,
Stefano Gnocchi,
Daniela Hauser
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.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
Coronavirus disease (COVID-19),
Domestic demand and components,
Monetary policy and uncertainty
JEL Code(s):
E,
E2,
E24,
E3,
E32,
E5,
E52,
J,
J2,
J22
A Review of the Bank of Canada’s Support of Key Financial Markets During the COVID-19 Crisis
Staff Discussion Paper 2023-9
Joshua Fernandes,
Michael Mueller
The COVID-19 pandemic placed unprecedented strain on the global financial system. We describe how the Bank of Canada responded to the rapidly deteriorating liquidity in core Canadian fixed-income markets.
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Coronavirus disease (COVID-19),
Financial markets,
Market structure and pricing,
Monetary policy and uncertainty
JEL Code(s):
E,
E4,
E44,
E5,
E58,
G,
G0,
G01
Turning Words into Numbers: Measuring News Media Coverage of Shortages
Staff Discussion Paper 2023-8
Lin Chen,
Stephanie Houle
We develop high-frequency, news-based indicators using natural language processing methods to analyze news media texts. Our indicators track both supply (raw, intermediate and final goods) and labour shortages over time. They also provide weekly time-varying topic narratives about various types of shortages.
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Coronavirus disease (COVID-19),
Econometric and statistical methods,
Monetary policy and uncertainty,
Recent economic and financial developments
JEL Code(s):
C,
C5,
C55,
C8,
C82,
E,
E3,
E37
Introducing the Bank of Canada’s Market Participants Survey
Staff Analytical Note 2023-1
Annick Demers,
Tamara Gomes,
Stephane Gignac
The Market Participants Survey (MPS) gathers financial market participants’ expectations for key macroeconomic and financial variables and for monetary policy. This staff analytical note describes the MPS’s objectives and main features, its process and design, and how Bank of Canada staff use the results.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Financial markets,
Monetary policy and uncertainty,
Recent economic and financial developments
JEL Code(s):
C,
C8,
C83,
E,
E4,
E44,
E5,
E52,
E58,
G,
G1,
G12,
G14
The Central Bank’s Dilemma: Look Through Supply Shocks or Control Inflation Expectations?
Staff Working Paper 2022-41
Paul Beaudry,
Thomas J. Carter,
Amartya Lahiri
When countries are hit by supply shocks, central banks often face the dilemma of either looking through such shocks or reacting to them to ensure that inflation expectations remain anchored. In this paper, we propose a tractable framework to capture this dilemma and then explore optimal policy under a range of assumptions about how expectations are formed.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Central bank research,
Economic models,
Inflation and prices,
Monetary policy,
Monetary policy and uncertainty,
Monetary policy communications
JEL Code(s):
E,
E1,
E12,
E2,
E24,
E3,
E31,
E5,
E52,
E58,
E6,
E65