Do Firms’ Sales Expectations Hit the Mark? Evidence from the Business Leaders’ Pulse Staff discussion paper 2025-15 Owen Gaboury, Farrukh Suvankulov, Mathieu Utting We analyze Canadian data from the Bank of Canada’s Business Leaders’ Pulse, examining firms’ sales growth expectations. We find that expected growth predicts outcomes, uncertainty influences forecast errors and revisions, and firms with weak past performance anticipate and experience weaker future growth. These results highlight the survey’s value for understanding business expectations. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C8, C83, D, D2, D22 Research Theme(s): Monetary policy, Monetary policy framework and transmission, Real economy and forecasting
Examining the Links Between Firm Performance and Insolvency Staff discussion paper 2025-10 Dylan Hogg, Hossein Hosseini Jebeli Assessing insolvency dynamics is essential for evaluating the financial health of non-financial corporations and mitigating macroeconomic and financial stability risks. This study leverages a newly created Statistics Canada dataset linking insolvency records with firm-level financial data to develop a robust framework for monitoring insolvency risk Content Type(s): Staff research, Staff discussion papers JEL Code(s): D, D2, D22, G, G3, G33, L, L2, L20 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit, Models and tools, Econometric, statistical and computational methods
Bouncing Back: How Mothballing Curbs Prices Staff working paper 2024-51 Thibaut Duprey, Artur Kotlicki, Daniel E. Rigobon, Philip Schnattinger We investigate the macroeconomic impacts of mothballed businesses—those that closed temporarily—on sectoral equilibrium prices after a negative demand shock. Our results suggest that pandemic fiscal support for temporary closures may have eased inflationary pressures. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C5, C55, C8, C81, D, D2, D22, E, E3, E32 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
The (Mis)Allocation of Corporate News Staff working paper 2024-47 Xing Guo, Alistair Macaulay, Wenting Song We study how the distribution of information supply by the news media affects the macroeconomy. We find that media coverage focuses particularly on the largest firms, and that firms’ equity financing and investment increase after media coverage. But these equity and investment responses are largest among small, rarely covered firms. Our quantitative studies highlight that the aggregate effects of media coverage depend crucially on how that coverage is allocated. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D2, D22, D6, D61, L, L1, L11, L2, L20 Research Theme(s): Financial markets and funds management, Market functioning, Financial system, Financial institutions and intermediation, Models and tools, Econometric, statistical and computational methods, Economic models
An Anatomy of Firms’ Political Speech Staff working paper 2024-37 Pablo Ottonello, Wenting Song, Sebastian Sotelo We study the distribution of political speech across U.S. firms. We develop a measure of political engagement based on firms’ communications (earning calls, regulatory filings, and social media) by training a large language model to identify statements that contain political opinions. Using these data, we document five facts about firms’ political engagement. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D2, D22, D6, D63, G, G4, G41, L, L1, L11, L2, L20 Research Theme(s): Financial markets and funds management, Market structure
Pricing behaviour and inflation during the COVID-19 pandemic: Insights from consumer prices microdata Staff analytical note 2024-6 Olga Bilyk, Mikael Khan, Olena Kostyshyna Using the microdata underlying the Canadian consumer price index, we study how often and by how much firms changed their prices during the COVID-19 pandemic. We find that the surge in inflation was mainly associated with retailers raising prices much more often than before. We also find that more recently, corporate price-setting behaviour appears to be approaching pre-pandemic norms. Content Type(s): Staff research, Staff analytical notes JEL Code(s): D, D2, D22, E, E3, E31, L, L1, L11 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
COVID-19 Hasn’t Killed Merchant Acceptance of Cash: Results from the 2023 Merchant Acceptance Survey Staff discussion paper 2024-2 Angelika Welte, Katrina Talavera, Liang Wang, Joy Wu The Bank of Canada’s Merchant Acceptance Survey finds that 96% of small and medium-sized businesses in Canada accepted cash in 2023. Acceptance of debit and credit cards has increased to 89%, and acceptance of digital payments has also increased. However, Canada is far from being a cashless society. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C8, D, D2, D22, E, E4, L, L2 Research Theme(s): Money and payments, Cash and bank notes, Retail payments
The contribution of firm profits to the recent rise in inflation Staff analytical note 2023-12 Panagiotis Bouras, Christian Bustamante, Xing Guo, Jacob Short We measure the contribution to inflation from the growth in markups of Canadian firms. The dynamics of inflation and markups suggest that changes in markups could account for less than one-tenth of inflation in 2021. Further, they suggest that peak inflation was driven primarily by changes in the costs of firms. Content Type(s): Staff research, Staff analytical notes JEL Code(s): D, D2, D22, D4, E, E3, E31, L, L1, L11 Research Theme(s): Financial markets and funds management, Market functioning, Monetary policy, Inflation dynamics and pressures
SME Failures Under Large Liquidity Shocks: An Application to the COVID-19 Crisis Staff working paper 2023-32 Pierre-Olivier Gourinchas, Şebnem Kalemli-Özcan, Veronika Penciakova, Nicholas Sander We study the effects of financial frictions on firm exit when firms face large liquidity shocks. We develop a simple model of firm cost-minimization that introduces a financial friction that limits firms’ borrowing capacity to smooth temporary shocks to liquidity. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D2, D21, D22, E, E6, E65, H, H8, H81 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit, Monetary policy, Real economy and forecasting
Firms’ inflation expectations and price-setting behaviour in Canada: Evidence from a business survey Staff analytical note 2023-3 Ramisha Asghar, James Fudurich, Jane Voll Canadian firms’ expectations for high inflation may be influencing their price setting, supporting strong price growth and delays in the transmission of monetary policy. Using data from the Business Outlook Survey, we investigate the reasons behind widespread price growth seen in Canada in 2021 and early 2022. Content Type(s): Staff research, Staff analytical notes JEL Code(s): D, D2, D22, E, E3, E31 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting