We demonstrate the ability of reinforcement learning techniques to estimate the best-response functions of banks participating in high-value payments systems—a real-world strategic game of incomplete information.
Digital currencies store balances in anonymous electronic addresses. This paper analyzes the trade-offs between the safety and convenience of aggregating balances in addresses, electronic wallets and banks.
How should policy be designed at high debt levels, when fiscal authorities have little room to adjust taxes? Assigning the monetary authority a role in achieving debt sustainability makes it less effective in stabilizing inflation and output.
We study how different monetary policies affect the yield curve and interact. Our study highlights the importance of the spillover structure across the yield curve for policy-making.
What are the main drivers behind the monetary policy reaction function of the People’s Bank of China?
We use retail payment data in conjunction with machine learning techniques to predict the effects of COVID-19 on the Canadian economy in near-real time. We find this approach yields a significant increase in forecasting precision over a linear benchmark model. This model can help policy-makers before official data are released.
The lack of improvement in allocative efficiency plays a quantitatively important role in the productivity slowdown in the United States and the widening Canada–US productivity gap.
When lenders cannot directly identify behavioural and rational borrowers, they use type scoring to track the likelihood of a borrower’s type. This leads to the partial pooling of borrowers, which results in rational borrowers subsidizing borrowing costs for behavioural borrowers. This, in turn, reduces the effectiveness of regulatory policies that target mistakes by behavioural borrowers.
Because they mimic desirable features of cash and are typically used for smaller-value transactions, contactless payment cards are a competitive alternative to cash. This study investigates whether contactless credit cards are an important contributor to the decline in the transactional usage of cash, using Canadian panel data between 2010 and 2017.