November 19, 2015 Bank of Canada Review - Autumn 2015 In this issue, Bank researchers discuss the muted recovery from the 2007–09 financial crisis and possible causes. There are also discussions about the Bank’s new Canadian survey of household expectations, measuring both durable goods and housing prices in the CPI and how regulatory changes may affect monetary policy operating frameworks. In the final article, improvements to the management of Canada’s foreign exchange reserves are introduced. Content Type(s): Publications, Bank of Canada Review
On Commodity-Sensitive Currencies and Inflation Targeting Staff Working Paper 2001-3 Kevin Clinton Two aspects of the recent monetary history of Canada, Australia, and New Zealand stand out: the sensitivity of their dollars to prices of resource-based commodities, and inflation targeting. This paper explores various aspects of these phenomena. Content Type(s): Staff research, Staff working papers Research Topic(s): Exchange rates, Inflation targets, International topics, Monetary policy implementation JEL Code(s): E, E3, E31, E5, E52, F, F3, F31, F4, F42
Efficient Hedging and Pricing of Equity-Linked Life Insurance Contracts on Several Risky Assets Staff Working Paper 2006-43 Alexander Melnikov, Yuliya Romanyuk The authors use the efficient hedging methodology for optimal pricing and hedging of equity-linked life insurance contracts whose payoff depends on the performance of several risky assets. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial markets JEL Code(s): D, D8, D81, G, G1, G10, G12
Cheap But Flighty: How Global Imbalances Create Financial Fragility Staff Working Paper 2015-33 Enrico Perotti, Toni Ahnert We analyze how a wealth shift to emerging countries may lead to instability in developed countries. Investors exposed to expropriation risk are willing to pay a safety premium to invest in countries with good property rights. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial institutions, Financial stability JEL Code(s): F, F3, G, G2
Database of Sovereign Defaults, 2017 Technical Report No. 101 David Beers, Jamshid Mavalwalla Until recently, there have been few efforts to systematically measure and aggregate the nominal value of the different types of sovereign government debt in default. To help fill this gap, the Bank of Canada’s Credit Rating Assessment Group (CRAG) has developed a comprehensive database of sovereign defaults posted on the Bank of Canada’s website. Content Type(s): Staff research, Technical reports Research Topic(s): Debt management, Development economics, Financial stability, International financial markets JEL Code(s): F, F3, F34, G, G1, G10, G14, G15
Complex Ownership and Capital Structure Staff Working Paper 2009-12 Teodora Paligorova, Zhaoxia Xu This paper investigates the impact of pyramid ownership structure and multiple controlling shareholders on firm leverage. Pyramids, having at least one controlling shareholder and a subsidiary, rely significantly more on debt financing than non-pyramid firms. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial markets, International topics JEL Code(s): G, G3, G31, G32
Should Banks Be Worried About Dividend Restrictions? Staff Working Paper 2023-49 Josef Schroth A regulator would want to restrict dividends to force banks to rebuild capital during a crisis. But such a policy is not time-consistent. A time-consistent policy would let banks gradually rebuild capital and pay dividends even when their equity remains below pre-crisis levels. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Credit risk management, Financial stability, Financial system regulation and policies, Lender of last resort JEL Code(s): E, E1, E13, E3, E32, E4, E44
Strengthening Inflation Targeting: Review and Renewal Processes in Canada and Other Advanced Jurisdictions Staff Discussion Paper 2020-7 Robert Amano, Thomas J. Carter, Lawrence L. Schembri We summarize the review and renewal process at four central banks (Reserve Bank of New Zealand, Bank of England, Sveriges Riksbank and the US Federal Reserve Bank) and compare them with the process at the Bank of Canada, which has been well-established since 2001. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Central bank research, Inflation targets, Monetary policy framework JEL Code(s): E, E5, E52, E58
Investment, Private Information, and Social Learning: A Case Study of the Semiconductor Industry Staff Working Paper 2004-32 Rose Cunningham Social learning models of investment provide an interesting explanation for sudden changes in investment behaviour. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles JEL Code(s): C, C3, C35, E, E3, E32, L, L6, L63
May 5, 2015 Liquid Markets for a Solid Economy Remarks Carolyn A. Wilkins Chambre de commerce du Montréal métropolitain Montréal, Quebec Senior Deputy Governor Wilkins discusses funding and market liquidity, and announces consultations on the Bank’s market operations and emergency lending frameworks. Content Type(s): Press, Speeches and appearances, Remarks Research Topic(s): Asset pricing, Financial institutions, Financial markets, Financial stability, Financial system regulation and policies, Lender of last resort