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220
result(s)
The impact of higher interest rates on mortgage payments
Staff Analytical Note 2023-19
Maria teNyenhuis,
Adam Su
We investigate how the increase in interest rates since early 2022 is affecting mortgage payments. By November 2023, less than half of mortgage holders had faced higher payments. Many borrowers will see a sizable increase in payments at renewal, although income growth could help mitigate the impact.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Credit and credit aggregates,
Financial institutions,
Interest rates,
Recent economic and financial developments
JEL Code(s):
D,
D1,
E,
E4,
E5,
G,
G2,
G21
Finding the balance—measuring risks to inflation and to GDP growth
Staff Analytical Note 2023-18
Bruno Feunou,
James Kyeong
Using our new quantitative tool, we show how the risks to the inflation and growth outlooks have evolved over the course of 2023.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Business fluctuations and cycles,
Econometric and statistical methods
JEL Code(s):
C,
C3,
C32,
C5,
C58,
E,
E4,
E44,
G,
G1,
G17
Assessing the effects of higher immigration on the Canadian economy and inflation
Staff Analytical Note 2023-17
Julien Champagne,
Erik Ens,
Xing Guo,
Olena Kostyshyna,
Alexander Lam,
Corinne Luu,
Sarah Miller,
Patrick Sabourin,
Joshua Slive,
Temel Taskin,
Jaime Trujillo,
Shu Lin Wee
We assess the complex macroeconomic implications of Canada’s recent population increases. We find that newcomers significantly boost the non-inflationary, potential growth of the economy, but existing imbalances in the housing sector may be exacerbated. Greater housing supply is needed to complement the long-term economic benefits of population growth.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Domestic demand and components,
Housing,
Inflation and prices,
Labour markets,
Potential output,
Recent economic and financial developments
JEL Code(s):
A,
A1,
A10,
E,
E2,
E20,
E3,
E31,
J,
J1,
J11,
J15
Machine learning for economics research: when, what and how
Staff Analytical Note 2023-16
Ajit Desai
This article reviews selected papers that use machine learning for economics research and policy analysis. Our review highlights when machine learning is used in economics, the commonly preferred models and how those models are used.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Central bank research,
Econometric and statistical methods,
Economic models
JEL Code(s):
A,
A1,
A10,
B,
B2,
B23,
C,
C4,
C45,
C5,
C55
Decentralized finance: Innovations and challenges
Staff Analytical Note 2023-15
Jonathan Chiu,
Hanna Yu
Decentralized finance surged in popularity around 2020. We explore its value and limitations and highlight some potential regulatory concerns.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Digital currencies and fintech,
Financial stability,
Payment clearing and settlement systems
JEL Code(s):
G,
G1,
G2
Three things we learned about the Lynx payment system
Staff Analytical Note 2023-14
Nikil Chande,
Zhentong Lu,
Hiru Rodrigo,
Phoebe Tian
Canada transitioned to a new wholesale payment system, Lynx, in August 2021. Lynx is based on a real-time settlement model that eliminates credit risk in the system. This model can require more liquidity; however, Lynx’s design allows Canada’s wholesale payments to settle efficiently.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Financial institutions,
Financial services,
Financial system regulation and policies,
Payment clearing and settlement systems
JEL Code(s):
C,
C1,
C10,
E,
E4,
E42,
G,
G2,
G28
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
The contribution of firm profits to the recent rise in inflation
Staff Analytical Note 2023-12
Panagiotis Bouras,
Christian Bustamante,
Xing Guo,
Jacob Short
We measure the contribution to inflation from the growth in markups of Canadian firms. The dynamics of inflation and markups suggest that changes in markups could account for less than one-tenth of inflation in 2021. Further, they suggest that peak inflation was driven primarily by changes in the costs of firms.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Firm dynamics,
Inflation and prices,
Market structure and pricing
JEL Code(s):
D,
D2,
D22,
D4,
E,
E3,
E31,
L,
L1,
L11
Do hedge funds support liquidity in the Government of Canada bond market?
Staff Analytical Note 2023-11
Jabir Sandhu,
Rishi Vala
While Government of Canada bond transactions of hedge funds are typically in the opposite direction to those of other market participants, during the peak period of market turmoil in March 2020, hedge funds sold these bonds, just as other market participants did. This shows that hedge funds can at times contribute to one-sided markets and amplify declines in market liquidity.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Coronavirus disease (COVID-19),
Financial markets,
Financial stability,
Market structure and pricing
JEL Code(s):
D,
D4,
D47,
D5,
D53,
G,
G1,
G12,
G14,
G2,
G23