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536 result(s)

Unintended Consequences of the Home Affordable Refinance Program

Staff Working Paper 2024-11 Phoebe Tian, Chen Zheng
We investigate the unintended consequences of the Home Affordable Refinance Program (HARP). Originally designed to help borrowers refinance after the 2008–09 global financial crisis, HARP inadvertently strengthened the market power of incumbent lenders by creating a cost advantage for them. Despite a 2013 policy rectifying this cost advantage, we still find significant welfare losses for borrowers.
Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions JEL Code(s): G, G2, G21, G5, G51, L, L5, L51

Forecasting Recessions in Canada: An Autoregressive Probit Model Approach

Staff Working Paper 2024-10 Antoine Poulin-Moore, Kerem Tuzcuoglu
We forecast recessions in Canada using an autoregressive (AR) probit model. The results highlight the short-term predictive power of the US economic activity and suggest that financial indicators are reliable predictors of Canadian recessions. In addition, the suggested model meaningfully improves the ability to forecast Canadian recessions, relative to a variety of probit models proposed in the Canadian literature.

Monetary Policy Transmission Through Shadow and Traditional Banks

Staff Working Paper 2024-8 Amina Enkhbold
I investigate how monetary policy transmits to mortgage rates via the mortgage market concentration channel for both traditional and shadow banks in the United States from 2009 to 2019. On average, shadow and traditional banks exhibit only a slight disparity in transmitting monetary shocks to mortgage rates.

Communicating Inflation Uncertainty and Household Expectations

Staff Working Paper 2023-63 Olena Kostyshyna, Luba Petersen
We examine the value of direct communication to households about inflation and the uncertainty around inflation statistics. All types of information about inflation are effective at immediately managing inflation expectations, with information about outlooks being more effective and relevant than that about recent inflation and Bank targets.

Monetary Policy and Racial Inequality in Housing Markets: A Study of 140 US Metropolitan Areas

Staff Working Paper 2023-62 Qi Li, Xu Zhang
We find that minority households see greater declines in housing returns and entries into homeownership than White households after a tightening of monetary policy. Our findings emphasize the unintended consequences of monetary policy on racial inequality in the housing market.
Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Housing, Monetary policy JEL Code(s): E, E4, E40, E5, E52, R, R0, R00

Third-Country Effects of U.S. Immigration Policy

Staff Working Paper 2023-60 Agostina Brinatti, Xing Guo
We study how the tightening of US immigration policy affects the Canadian economy and American workers. After the reduction in H-1B visa admissions in 2017, more immigrants came to Canada, and Canadian firms expanded their employment, sales and exports. The close trade link between the United States and Canada dampens the benefit American workers derive from this policy change.

Climate-Related Flood Risk to Residential Lending Portfolios in Canada

We assess the potential financial risks of current and projected flooding caused by extreme weather events in Canada. We focus on the residential real estate secured lending (RESL) portfolios of Canadian financial institutions (FIs) because RESL portfolios are an important component of FIs’ balance sheets and because the assets used to secure such loans are immobile and susceptible to climate-related extreme weather events.

Making It Real: Bringing Research Models into Central Bank Projections

Staff Discussion Paper 2023-29 Marc-André Gosselin, Sharon Kozicki
Macroeconomic projections and risk analyses play an important role in guiding monetary policy decisions. Models are integral to this process. This paper discusses how the Bank of Canada brings research models and lessons learned from those models into the central bank projection environment.
Content Type(s): Staff research, Staff discussion papers Topic(s): Economic models, Monetary policy JEL Code(s): C, C3, C32, C5, C51, E, E3, E37, E4, E47, E5, E52

Assessing the effects of higher immigration on the Canadian economy and inflation

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.

Immigration and Provision of Public Goods: Evidence at the Local Level in the U.S.

Staff Working Paper 2023-57 Anna Maria Mayda, Mine Z. Senses, Walter Steingress
Using U.S. county-level data from 1990 to 2010, we study the causal impact of immigration on the provision of local public goods. We uncover substantial heterogeneity across immigrants with different skills and immigrants of different generations, which leads to unequal fiscal effects across U.S. counties.
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