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CBDC and Monetary Policy

Staff Analytical Note 2020-4 Mohammad Davoodalhosseini, Francisco Rivadeneyra, Yu Zhu
Improving the conduct of monetary policy is unlikely to be the main motivation for central banks to issue a central bank digital currency (CBDC). While some argue that a CBDC could allow more complex transfer schemes or the ability to break below the zero lower bound, we find these benefits might be small or difficult to realize in practice.

The Effect of Mortgage Rate Resets on Debt: Evidence from TransUnion (Part I)

Staff Analytical Note 2020-2 Katya Kartashova
This note studies how decreases in mortgage rates affect the behaviour of borrowers in terms of spending on durable goods and repaying debt.

The Power of Helicopter Money Revisited: A New Keynesian Perspective

Staff Discussion Paper 2020-1 Thomas J. Carter, Rhys R. Mendes
We analyze money financing of fiscal transfers (helicopter money) in two simple New Keynesian models: a “textbook” model in which all money is non-interest-bearing (e.g., all money is currency), and a more realistic model with interest-bearing reserves.

A Spatial Model of Bank Branches in Canada

Staff Working Paper 2020-4 Heng Chen, Matthew Strathearn
Using data on bank branch locations across Canada from 2008 to 2018, we explore an interesting aspect of bank branch competition—geographic concentration. We find that bank branch density does not correlate with geographic and market concentration; however, we do find strong correlation with postal-code demographics.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Firm dynamics, Market structure and pricing JEL Code(s): L, L1, R, R3

Managing GDP Tail Risk

Staff Working Paper 2020-3 Thibaut Duprey, Alexander Ueberfeldt
Models for macroeconomic forecasts do not usually take into account the risk of a crisis—that is, a sudden large decline in gross domestic product (GDP). However, policy-makers worry about such GDP tail risk because of its large social and economic costs.

Social Learning and Monetary Policy at the Effective Lower Bound

This research develops a model in which the economy is directly influenced by how pessimistic or optimistic economic agents are about the future. The agents may hold different views and update them as new economic data become available.

Contagion in Dealer Networks

Staff Working Paper 2020-1 Jean-Sébastien Fontaine, Adrian Walton
Dealers connect investors who want to buy or sell securities in financial markets. Over time, dealers and investors form trading networks to save time and resources. An emerging field of research investigates how networks form.

Monetary Policy and Government Debt Dynamics Without Commitment

Staff Working Paper 2019-52 Dmitry Matveev
I show that maturity considerations affect the optimal conduct of monetary and fiscal policy during a period of government debt reduction. I consider a New Keynesian model and study a dynamic game of monetary and fiscal policy authorities without commitment, characterizing the incentives that drive the choice of interest rate.
Content Type(s): Staff Research, Staff Working Papers Topic(s): Fiscal policy, Monetary policy JEL Code(s): E, E5, E52, E6, E62, E63