How Changes in Oil Prices Affect the Macroeconomy Staff Working Paper 2009-33 Brian DePratto, Carlos De Resende, Philipp Maier We estimate a New Keynesian general-equilibrium open economy model to examine how changes in oil prices affect the macroeconomy. Our model allows oil price changes to be transmitted through temporary demand and supply channels (affecting the output gap), as well as through persistent supply side effects (affecting trend growth). Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Interest rates, Monetary policy transmission, Potential output, Productivity JEL Code(s): F, F4, F41, Q, Q4, Q43
Should Central Banks Worry About Nonlinearities of their Large-Scale Macroeconomic Models? Staff Working Paper 2017-21 Vadym Lepetyuk, Lilia Maliar, Serguei Maliar How wrong could policymakers be when using linearized solutions to their macroeconomic models instead of nonlinear global solutions? Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Econometric and statistical methods, Economic models JEL Code(s): C, C6, C61, C63, C68, E, E3, E31, E5, E52
Inflation and Unemployment in Competitive Search Equilibrium Staff Working Paper 2010-15 Mei Dong Using a monetary search model, Rocheteau, Rupert and Wright (2007) show that the relationship between inflation and unemployment can be positive or negative depending on the primitives of the model. The key features are indivisible labor, nonseparable preferences and bargaining. Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation: costs and benefits JEL Code(s): E, E1, E12, E13, E4, E40, E5, E52
The Implications of the FTA and NAFTA for Canada and Mexico Technical Report No. 70 William White This report highlights the possible implications of the Free Trade Agreement (FTA) and the North American Free Trade Agreement (NAFTA) for Canada and Mexico. While it is still early, the initial evidence indicates that these treaties are contributing to a continental process of industrial restructuring that will contribute to higher living standards over time. The […] Content Type(s): Staff research, Technical reports Research Topic(s): International topics JEL Code(s): F, F1, F13
Globalization and Inflation: The Role of China Staff Working Paper 2008-35 Denise Côté, Carlos De Resende In this paper, we develop a theoretical model which identifies four channels–import prices, competition with domestic suppliers and workers, and commodity prices–through which price- and wage-setting conditions in country j may affect inflation in country i. Content Type(s): Staff research, Staff working papers Research Topic(s): International topics JEL Code(s): E, E2, E22, E3, E32, E4, E44
Pocket Banks and Out-of-Pocket Losses: Links between Corruption and Contagion Staff Working Paper 2005-23 Raphael Solomon The author describes a model with a corrupt banking system, in which bankers knowingly lend at market interest rates to back projects riskier than the market rate indicates. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial stability JEL Code(s): D, D8, D82, G, G1, G19, G2, G21
Improving the Efficiency of Payments Systems Using Quantum Computing Staff Working Paper 2022-53 Christopher McMahon, Donald McGillivray, Ajit Desai, Francisco Rivadeneyra, Jean-Paul Lam, Thomas Lo, Danica Marsden, Vladimir Skavysh We develop an algorithm and run it on a hybrid quantum annealing solver to find an ordering of payments that reduces the amount of system liquidity necessary without substantially increasing payment delays. Content Type(s): Staff research, Staff working papers Research Topic(s): Digital currencies and fintech, Financial institutions, Financial services, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): C, C6, C61, C63, D, D8, D83, E, E4, E42, E5, E58
Alternative Optimized Monetary Policy Rules in Multi-Sector Small Open Economies: The Role of Real Rigidities Staff Working Paper 2010-9 Carlos De Resende, Ali Dib, Maral Kichian Inflation-targeting central banks around the world often state their inflation objectives with regard to the consumer price index (CPI). Yet the literature on optimal monetary policy based on models with nominal rigidities and more than one sector suggests that CPI inflation is not always the best choice from a social welfare perspective. Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation and prices, Inflation targets, Inflation: costs and benefits, Monetary policy framework, Monetary policy implementation JEL Code(s): E, E4, E5, E52, F, F3, F4
Financial Intermediation, Liquidity and Inflation Staff Working Paper 2008-49 Jonathan Chiu, Césaire Meh This paper develops a search-theoretic model to study the interaction between banking and monetary policy and how this interaction affects the allocation and welfare. Regarding how banking affects the welfare costs of inflation: First, we find that, with banking, inflation generates smaller welfare costs. Content Type(s): Staff research, Staff working papers Research Topic(s): Monetary policy framework JEL Code(s): E, E4, E40, E5, E50
May 11, 2017 The Life Cycle of Government of Canada Bonds in Core Funding Markets Bank of Canada Review - Spring 2017 Narayan Bulusu, Sermin Gungor Data on the use of government securities in the repo, securities lending and cash markets suggest there are bond market clienteles in Canada. Shorter-term bonds are more prevalent in the repo market, while longer-maturity securities are more active in the securities lending market—consistent with the preferred habitat hypothesis. These results could help design better debt-management strategies and more-effective policies to maintain well-functioning financial markets. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Debt management, Financial markets JEL Code(s): G, G1, G12, G2, G23