Monetary Policy Transmission during Financial Crises: An Empirical Analysis Staff Working Paper 2014-21 Tatjana Dahlhaus This paper studies the effects of a monetary policy expansion in the United States during times of high financial stress. The analysis is carried out by introducing a smooth transition factor model where the transition between states (“normal” and high financial stress) depends on a financial conditions index. Content Type(s): Staff research, Staff working papers Research Topic(s): Econometric and statistical methods, Financial markets, Monetary policy transmission JEL Code(s): C, C1, C11, C3, C32, E, E3, E32, E4, E44, G, G0, G01
Testing for a Structural Break in the Volatility of Real GDP Growth in Canada Staff Working Paper 2001-9 Alexandre Debs This study tests for a structural break in the volatility of real GDP growth in Canada following the methodology of McConnell and Quiros (1998). A break is found in the first quarter of 1991. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Econometric and statistical methods JEL Code(s): C, C1, C12, E, E3, E32
Flight from Safety: How a Change to the Deposit Insurance Limit Affects Households’ Portfolio Allocation Staff Working Paper 2019-29 H. Evren Damar, Reint Gropp, Adi Mordel Deposit insurance protects depositors from failing banks, thus making insured deposits risk-free. When a deposit insurance limit is increased, some deposits that previously were uninsured become insured, thereby increasing the share of risk-free assets in households’ portfolios. This increase cannot simply be undone by households, because to invest in uninsured deposits, a household must first invest in insured deposits up to the limit. This basic insight is the starting point of the analysis in this paper. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial system regulation and policies JEL Code(s): D, D1, D14, G, G2, G21, G28, L, L5, L51
Financial Development and the Volatility of Income Staff Working Paper 2013-4 Tiago Pinheiro, Francisco Rivadeneyra, Marc Teignier This paper presents a general equilibrium model with endogenous collateral constraints to study the relationship between financial development and business cycle fluctuations in a cross-section of economies with different sizes of their financial sector. Content Type(s): Staff research, Staff working papers Research Topic(s): Credit and credit aggregates, Financial stability JEL Code(s): E, E3, E32, E6, E60
November 18, 2001 A New Measure of Core Inflation Bank of Canada Review - Autumn 2001 Tiff Macklem While the Bank of Canada's inflation-control target is specified in terms of the rate of increase in the total consumer price index, the Bank uses a measure of trend or "core" inflation as a short-term guide for its monetary policy actions. When the inflation targets were renewed in May 2001, the Bank announced that it was adopting a new measure of core inflation. This measure excludes the eight most volatile components of the CPI and adjusts the remaining components for the effect of changes in indirect taxes. In this article, the author discusses the definition of the new measure of core inflation and describes some of its advantages relative to the previous measure. He notes that the new measure has a firmer statistical basis, has a better correspondence with economic theory, and does a better job of predicting future changes in overall inflation. While the new measure has these advantages, the Bank will continue to monitor a broad range of indicators when assessing the likely future path for inflation. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Inflation targets
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
Trade and Diffusion of Embodied Technology: An Empirical Analysis Staff Working Paper 2023-21 Stephen Ayerst, Faisal Ibrahim, Gaelan MacKenzie, Swapnika Rachapalli Using data from patents, citations, inter-sectoral sales and customs, we examine the international diffusion of technology through imports of sectoral knowledge and production inputs. We develop an instrumental variable strategy to identify the causal effects of technology embodied in imports on innovation and diffusion outcomes. Content Type(s): Staff research, Staff working papers Research Topic(s): Development economics, International topics, Productivity, Trade integration JEL Code(s): F, F1, F14, F6, F61, O, O1, O19, O3, O31, O33
What Does Downward Nominal-Wage Rigidity Imply for Monetary Policy? Staff Working Paper 1997-13 Seamus Hogan A recent paper has suggested there might be a trade-off between inflation and unemployment at low inflation rates and this has led some economists to recommend that Canada increase its inflation rate. Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation targets, Monetary policy framework, Monetary policy transmission JEL Code(s): C, C5, C52, E, E2, E24, E5, E50
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
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