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2338
result(s)
Assessing global potential output growth: April 2024
Staff Analytical Note 2024-10
Amor Aniss Benmoussa,
Raheeb Dastagir,
Eshini Ekanayake,
Justin-Damien Guénette,
Helen Lao,
Jenna Rolland-Mills,
Aidan Spencer,
Lin Xiang
This note presents the annual update of Bank of Canada staff estimates for growth in global potential output. These estimates serve as key inputs to the analysis supporting the April 2024 Monetary Policy Report.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Potential output,
Productivity
JEL Code(s):
E,
E1,
E2,
F,
F0,
O,
O4
Assessing the US and Canadian neutral rates: 2024 update
Staff Analytical Note 2024-9
Frida Adjalala,
Felipe Alves,
Hélène Desgagnés,
Wei Dong,
Dmitry Matveev,
Laure Simon
We assess both the US and Canadian nominal neutral rates to be in the range of 2.25% to 3.25%, somewhat higher than the range of 2.0% to 3.0% in 2023. The assessed range is back to the level it was at in April 2019.
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
Benchmarks for assessing labour market health: 2024 update
Staff Analytical Note 2024-8
Erik Ens,
Alexander Lam,
Kurt See,
Gabriela Galassi
We assess the health of the Canadian labour market. We find that it has seen gradual but material easing since 2023, amid some signs of structural changes.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Business fluctuations and cycles,
Econometric and statistical methods,
Labour markets,
Monetary policy
JEL Code(s):
E,
E2,
J,
J2,
J3,
J6
The Neutral Interest Rate: Past, Present and Future
Staff Discussion Paper 2024-3
Matteo Cacciatore,
Bruno Feunou,
Galip Kemal Ozhan
The decline in safe real interest rates over the past three decades has reignited discussions on the neutral real interest rate, known as R*. We address the determinants and estimation methods of R*, as well as the factors influencing its decline and its future trajectory.
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Interest rates,
Monetary policy,
Monetary policy framework
JEL Code(s):
E,
E4,
E43,
E5,
E52,
E6,
E62
U.S. Macroeconomic News and Low-Frequency Changes in Small Open Economies’ Bond Yields
Staff Working Paper 2024-12
Bingxin Ann Xing,
Bruno Feunou,
Morvan Nongni-Donfack,
Rodrigo Sekkel
Using two complementary approaches, we investigate the importance of U.S. macroeconomic news in driving low-frequency fluctuations in the term structure of interest rates in Canada, Sweden and the United Kingdom. We find that U.S. macroeconomic news is particularly important to explain changes in the expectation components of the nominal, real and break-even inflation rates of small open economies.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Central bank research,
Econometric and statistical methods
JEL Code(s):
E,
E4,
E43,
E44,
E47,
G,
G1,
G14
Liquidity risks at Canadian life insurance companies
Staff Analytical Note 2024-7
Patrick Aldridge,
Stephane Gignac,
Rishi Vala,
Adrian Walton
We examine how life insurers manage liquidity risks created by their business model. We find that Canadian life insurers did not face significant liquidity draws and continued their usual investment behaviour during the COVID-19 crisis and as interest rates increased in 2022.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Coronavirus disease (COVID-19),
Financial institutions,
Financial markets,
Financial stability,
Market structure and pricing
JEL Code(s):
D,
D4,
D47,
D5,
D53,
G,
G1,
G12,
G14,
G2,
G23
Unintended Consequences of the Home Affordable Refinance Program
Staff Working Paper 2024-11
Phoebe Tian,
Chen Zheng
We investigate the unintended consequences of the Home Affordable Refinance Program (HARP). Originally designed to help borrowers refinance after the 2008–09 global financial crisis, HARP inadvertently strengthened the market power of incumbent lenders by creating a cost advantage for them. Despite a 2013 policy rectifying this cost advantage, we still find significant welfare losses for borrowers.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Financial institutions
JEL Code(s):
G,
G2,
G21,
G5,
G51,
L,
L5,
L51
Pricing behaviour and inflation during the COVID-19 pandemic: Insights from consumer prices microdata
Staff Analytical Note 2024-6
Olga Bilyk,
Mikael Khan,
Olena Kostyshyna
Using the microdata underlying the Canadian consumer price index, we study how often and by how much firms changed their prices during the COVID-19 pandemic. We find that the surge in inflation was mainly associated with retailers raising prices much more often than before. We also find that more recently, corporate price-setting behaviour appears to be approaching pre-pandemic norms.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Firm dynamics,
Inflation and prices,
Recent economic and financial developments
JEL Code(s):
D,
D2,
D22,
E,
E3,
E31,
L,
L1,
L11
Measuring household financial stress in Canada using consumer surveys
Staff Analytical Note 2024-5
Nicolas Bédard,
Patrick Sabourin
We use data from the Canadian Survey of Consumer Expectations to understand how households are coping with high inflation and high interest rates. We build a subjective measure of financial stress and find that the level of stress is at a historical high but remains manageable for most households.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Domestic demand and components,
Financial stability,
Monetary policy transmission,
Recent economic and financial developments
JEL Code(s):
D,
D1,
D14,
G,
G5,
H,
H3