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220
result(s)
It takes a panel to predict the future: What the stock market says about future economic growth in Canada
Staff Analytical Note 2023-9
Greg Adams,
Jean-Sébastien Fontaine
Valuation ratios in the Canadian stock market can help reveal investors’ expectations about future economic growth because the impact of economic growth on valuation ratios can vary across industries. We find that this variation helps produce accurate forecasts of future growth of real gross domestic product in Canada. The forecasts from our model declined by just over 3 percentage points between January 2022 and February 2023—a period when the Bank of Canada rapidly increased the overnight rate. As well, we find that interest-rate-sensitive industries had an outsized contribution to this expected slowdown in growth.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Asset pricing,
Financial markets,
Monetary policy transmission
JEL Code(s):
E,
E4,
E44,
E47,
E5,
E52
Markups and inflation during the COVID-19 pandemic
Staff Analytical Note 2023-8
Olga Bilyk,
Timothy Grieder,
Mikael Khan
We find that prices and costs for consumer-oriented firms moved roughly one-for-one during the COVID-19 pandemic. This means firms fully passed rising costs through to the prices they charged. However, our results are suggestive, given data limitations and the uncertainty associated with estimating markups.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Firm dynamics,
Inflation and prices
JEL Code(s):
D,
D2,
D4,
E,
E2,
E3,
L,
L1
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
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
Assessing global potential output growth and the US neutral rate: April 2023
Staff Analytical Note 2023-5
Salma Ahmed,
Aviel Avshalumov,
Tania Chaar,
Eshini Ekanayake,
Helen Lao,
Louis Poirier,
Jenna Rolland-Mills,
Argyn Toktamyssov,
Lin Xiang
We expect global potential output growth to increase from 2.5% in 2022 to 2.8% by 2026. Compared with the April 2022 staff assessment, global potential output growth is marginally slower. The current range for the US neutral rate is 2% to 3%, unchanged from the last annual assessment.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Interest rates,
Monetary policy,
Potential output,
Productivity
JEL Code(s):
E,
E1,
E2,
E4,
E5,
F,
F0,
O,
O4
What we can learn by linking firms’ reported emissions with their financial data
Staff Analytical Note 2023-4
Matthew Ackman,
Timothy Grieder,
Callie Symmers,
Geneviève Vallée
We analyze the financial statements and stock prices of publicly traded firms incorporated in Canada that report greenhouse gas emissions. We find that these firms primarily use equity financing. We also find that equity investors increasingly account for firms’ emissions when making investment decisions but the impact appears small. This suggests that assets exposed to climate change remain at risk of a sudden repricing.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Asset pricing,
Climate change,
Financial stability,
Firm dynamics
JEL Code(s):
G,
G1,
G3,
Q,
Q5
Firms’ inflation expectations and price-setting behaviour in Canada: Evidence from a business survey
Staff Analytical Note 2023-3
Ramisha Asghar,
James Fudurich,
Jane Voll
Canadian firms’ expectations for high inflation may be influencing their price setting, supporting strong price growth and delays in the transmission of monetary policy. Using data from the Business Outlook Survey, we investigate the reasons behind widespread price growth seen in Canada in 2021 and early 2022.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Firm dynamics,
Inflation and prices,
Monetary policy transmission,
Recent economic and financial developments
JEL Code(s):
D,
D2,
D22,
E,
E3,
E31
A central bank digital currency for offline payments
Staff Analytical Note 2023-2
Cyrus Minwalla,
John Miedema,
Sebastian Hernandez,
Alexandra Sutton-Lalani
Offline functionality is a key consideration for a potential CBDC. We describe the different types of offline functionality based on their duration outside of network connection—either intermittent (for short periods) or extended (for longer periods). We discuss the advantages and drawbacks of each and consider implications for end-user devices, system resilience and universal accessibility.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Central bank research,
Digital currencies and fintech
JEL Code(s):
E,
E4,
E42,
E5,
E51,
E58,
O,
O3,
O31
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