Staff analytical notes are short articles that focus on topical issues relevant to the current economic and financial context.
220
result(s)
How do Canadian Corporate Bond Mutual Funds Meet Investor Redemptions?
Staff Analytical Note 2018-14
Guillaume Ouellet Leblanc,
Rohan Arora
When investors redeem their fund shares for cash, fixed-income fund managers can choose whether to draw on their liquid holdings or sell bonds in the secondary market. We analyze the liquidity-management decisions of Canadian corporate bond mutual funds, focusing on the strategies they use to meet investor redemptions.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Financial markets,
Financial stability
JEL Code(s):
G,
G1,
G2,
G20,
G23
The Share of Systematic Variations in the Canadian Dollar—Part III
Staff Analytical Note 2018-13
Guillaume Nolin,
James Kyeong,
Jean-Sébastien Fontaine
We draw a parallel between the dramatic increases of systematic variations in exchange rates and international bank lending. We find that when a country’s currency has a larger share of systematic variations, lending flows by international banks to that country become more sensitive to global lending - they also become more systematic. This parallel is particularly prevalent for large commodity exporters, including Canada. Global financial intermediation may open a new channel between the real economy and exchange rates.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Exchange rates
JEL Code(s):
F,
F3,
F31
Customer Liquidity Provision in Canadian Bond Markets
Staff Analytical Note 2018-12
Corey Garriott,
Jesse Johal
This analytical note assesses the prevalence of liquidity provision by institutional investors in Canadian bonds. We find that the practice is not prevalent in Canada. Customer liquidity provision is more prevalent for less liquid bonds, on days when liquidity is already expensive or when there are larger trading volumes. In our interpretation, Canadian dealers draw on customer liquidity as a supplementary source of liquidity and only when necessary, given its cost.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Financial institutions,
Financial markets,
Financial system regulation and policies,
Market structure and pricing,
Recent economic and financial developments
JEL Code(s):
G,
G1,
G14,
G2,
G20,
L,
L1
How to Manage Macroeconomic and Financial Stability Risks: A New Framework
Staff Analytical Note 2018-11
Alexander Ueberfeldt,
Thibaut Duprey
Financial system vulnerabilities increase the downside risk to future GDP growth. Macroprudential tightening significantly reduces financial stability risks associated with vulnerabilities. Monetary policy faces a trade-off between financial stability and macroeconomic risks.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Central bank research,
Economic models,
Financial stability,
Financial system regulation and policies,
Interest rates,
Monetary policy,
Monetary policy framework
JEL Code(s):
E,
E4,
E44,
E5,
E52,
E58,
G,
G0,
G01
Potential Output in Canada: 2018 Reassessment
Staff Analytical Note 2018-10
Andrew Agopsowicz,
Dany Brouillette,
Bassirou Gueye,
Julien McDonald-Guimond,
Jeffrey Mollins,
Youngmin Park
This note summarizes the reassessment of potential output, conducted by the Bank of Canada for the April 2018 Monetary Policy Report. Overall, the profile for potential output growth is expected to remain flat at 1.8 per cent between 2018 and 2020 and 1.9 per cent in 2021.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Labour markets,
Potential output,
Productivity
JEL Code(s):
E,
E0,
E00,
E2,
E22,
E23,
E24,
E3,
E37,
E6
Assessing Global Potential Output Growth: April 2018
Staff Analytical Note 2018-9
Richard Beard,
Anne-Katherine Cormier,
Michael Francis,
Katerina Gribbin,
Justin-Damien Guénette,
Christopher Hajzler,
James Ketcheson,
Kun Mo,
Louis Poirier,
Peter Selcuk,
Kristina Hess
This note presents our estimates of potential output growth for the global economy through 2020. Overall, we expect global potential output growth to remain broadly stable over the projection horizon, averaging 3.3 per cent, although there is considerable uncertainty surrounding these estimates.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
International topics,
Potential output,
Productivity
JEL Code(s):
E,
E1,
E10,
E2,
E20,
O,
O4
Personal Experiences and House Price Expectations: Evidence from the Canadian Survey of Consumer Expectations
Staff Analytical Note 2018-8
Mikael Khan,
Matthieu Verstraete
In this work, we use novel Canadian survey data to study how expectations of future changes in house prices are influenced by personal experiences. We find that recently experienced changes in local house prices are routinely extrapolated into expectations of year-ahead changes in national house prices.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Financial stability,
Housing
Did Canadian Corporate Bond Funds Increase their Exposures to Risks?
Staff Analytical Note 2018-7
Rohan Arora,
Nadeem Merali,
Guillaume Ouellet Leblanc
Canadian corporate bond mutual funds have rapidly increased in number and size in recent years. Their holdings have also become riskier, increasing their exposures to credit risk, interest rate risk and liquidity risk. We also briefly discuss financial stability implications.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Financial markets,
Financial stability
JEL Code(s):
G,
G1,
G2,
G20,
G23
Asymmetric Risks to the Economic Outlook Arising from Financial System Vulnerabilities
Staff Analytical Note 2018-6
Thibaut Duprey
When financial system vulnerabilities are elevated, they can give rise to asymmetric risks to the economic outlook. To illustrate this, I consider the economic outlook presented in the Bank of Canada’s October 2017 Monetary Policy Report in the context of two key financial system vulnerabilities: high levels of household indebtedness and housing market imbalances.
Content Type(s):
Staff research,
Staff analytical notes
Topic(s):
Business fluctuations and cycles,
Econometric and statistical methods,
Financial stability,
Financial system regulation and policies,
Monetary and financial indicators,
Monetary policy and uncertainty,
Recent economic and financial developments
JEL Code(s):
C,
C0,
C01,
C1,
C11,
C15,
E,
E1,
E17,
E3,
E32,
E37,
E4,
E44,
E47,
E5,
E58,
E6,
E66,
G,
G0,
G01,
G1,
G18