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2244
result(s)
SME Failures Under Large Liquidity Shocks: An Application to the COVID-19 Crisis
Staff Working Paper 2023-32
Pierre-Olivier Gourinchas,
Şebnem Kalemli-Özcan,
Veronika Penciakova,
Nicholas Sander
We study the effects of financial frictions on firm exit when firms face large liquidity shocks. We develop a simple model of firm cost-minimization that introduces a financial friction that limits firms’ borrowing capacity to smooth temporary shocks to liquidity.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Coronavirus disease (COVID-19),
Firm dynamics,
International topics
JEL Code(s):
D,
D2,
D21,
D22,
E,
E6,
E65,
H,
H8,
H81
The Macroeconomic Effects of Portfolio Equity Inflows
Staff Working Paper 2023-31
Nick Sander
I provide evidence that portfolio equity inflows can have expansionary effects on GDP and inflation if not offset by monetary policy. I use a shift-share instrument to estimate equity inflows based on plausibly exogenous timing of inflows into mutual funds with heterogeneous country portfolios.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Business fluctuations and cycles,
International financial markets,
International topics,
Monetary policy
JEL Code(s):
E,
E3,
E32,
F,
F3,
F32,
F4,
F44
Understanding Inflation Dynamics: The Role of Government Expenditures
We study the impact government expenditure has on inflation. We find that changes in government expenditure account for a substantial portion of inflation variations. We also find that inflation and inflation expectations respond negatively to fiscal spending shocks, reaffirming the supply-side channel through which inflation responds to fiscal expansions.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Central bank research,
Fiscal policy,
Inflation and prices
JEL Code(s):
E,
E3,
E6,
E62,
E63
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
Crowdfunding and Risk
Staff Working Paper 2023-28
David Cimon
Crowdfunding may enable unique products to reach the consumer market. I model a crowdfunding technology that publicly screens consumer demand early in the production process. In this model, entrepreneurs like crowdfunding for risky projects where demand is uncertain, but not for large, safe projects or for projects where production costs are uncertain.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Digital currencies and fintech,
Financial markets,
Financial services
JEL Code(s):
G,
G2,
G21,
G24,
G3,
G32
An Investigation into the Effects of Border Carbon Adjustments on the Canadian Economy
Staff Working Paper 2023-27
Y.-H. Henry Chen,
Hossein Hosseini Jebeli,
Craig Johnston,
Sergey Paltsev,
Marie-Christine Tremblay
We examine the economic implications of border carbon adjustments (BCAs) for Canada. We find that, BCAs, in the form of import tariffs, reduce Canada’s carbon leakage and improve its competitiveness when Canada is part of a broad coalition of BCA-implementing countries. Welfare also improves when tariff revenues are transferred to households.
Content Type(s):
Staff research,
Staff working papers
Topic(s):
Climate change,
International topics,
Trade integration
JEL Code(s):
C,
C6,
C68,
F,
F1,
H,
H2,
Q,
Q3,
Q37,
Q5
Benchmarks for assessing labour market health: 2023 update
Staff Analytical Note 2023-7
Erik Ens,
Kurt See,
Corinne Luu
We enhance benchmarks for assessing strength in the Canadian labour market. We find the labour market remains tight despite recent strong increases in labour supply, including among prime-working-age women. We also assess the anticipated easing in labour conditions in a context of high population growth.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Business fluctuations and cycles,
Coronavirus disease (COVID-19),
Econometric and statistical methods,
Labour markets,
Monetary policy
JEL Code(s):
E,
E2,
E24,
J,
J2,
J21,
J6
Reviewing Canada’s Monetary Policy Implementation System: Does the Evolving Environment Support Maintaining a Floor System?
Staff Discussion Paper 2023-10
Toni Gravelle,
Ron Morrow,
Jonathan Witmer
At the onset of the pandemic, the Bank of Canada transitioned its framework for monetary policy implementation from a corridor system to a floor system, which it has since decided to maintain. We provide a comprehensive analysis of both frameworks and assess their relative merits based on five key criteria that define a sound framework.
Content Type(s):
Staff research,
Staff discussion papers
Topic(s):
Market structure and pricing,
Monetary policy implementation,
Payment clearing and settlement systems
JEL Code(s):
D,
D4,
D47,
E,
E4,
E42,
E5,
E58
Potential output and the neutral rate in Canada: 2023 assessment
Staff Analytical Note 2023-6
Julien Champagne,
Christopher Hajzler,
Dmitry Matveev,
Harlee Melinchuk,
Antoine Poulin-Moore,
Galip Kemal Ozhan,
Youngmin Park,
Temel Taskin
We expect that potential output growth will rebound from 1.4% in 2022 to 2.2% on average between 2023 and 2026. We revised down our estimates of growth over 2022–25 relative to the April 2022 assessment. The Canadian nominal neutral rate remains unchanged—in the range of 2% to 3%.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Economic models,
Interest rates,
Labour markets,
Monetary policy,
Potential output,
Productivity
JEL Code(s):
E,
E2,
E3,
E4,
E5