How Do People View Price and Wage Inflation? Staff working paper 2022-34 Monica Jain, Olena Kostyshyna, Xu Zhang This paper examines household-level data from the Canadian Survey of Consumer Expectations (CSCE) to understand households’ expectations about price and wage inflation, how those expectations link to views about labour market conditions and the subsequent impact on households’ outlook for real spending growth. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C8, C83, D, D8, D84, E, E2, E21, E24, E3, E31 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
The Business Leaders’ Pulse—An Online Business Survey Staff discussion paper 2022-14 Tony Chernis, Chris D'Souza, Kevin MacLean, Tasha Reader, Joshua Slive, Farrukh Suvankulov This paper introduces the Business Leaders’ Pulse, a new online survey conducted each month. It is designed to provide timely and flexible input into the Bank of Canada’s monetary policy decision making by asking firms about their sales and employment growth expectations, the risks to their business outlook, and topical questions that address specific information needs of the Bank. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C8, C83, D, D2, D22, E, E3, E32 Research Theme(s): Monetary policy, Monetary policy framework and transmission, Real economy and forecasting
How well can large banks in Canada withstand a severe economic downturn? Staff analytical note 2022-6 Andisheh (Andy) Danaee, Harsimran Grewal, Brad Howell, Guillaume Ouellet Leblanc, Xuezhi Liu, Mayur Patel, Xiangjin Shen We examine the potential impacts of a severe economic shock on the resilience of major banks in Canada. We find these banks would suffer significant financial losses but nevertheless remain resilient. This underscores the role well-capitalized banks and sound underwriting practices play in supporting economic activity in a downturn. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E2, E27, E3, E37, E4, E44, G, G1, G2, G21, G23 Research Theme(s): Financial system, Financial institutions and intermediation, Financial stability and systemic risk
Financial Intermediaries and the Macroeconomy: Evidence from a High-Frequency Identification Staff working paper 2022-24 Pablo Ottonello, Wenting Song We provide empirical evidence of effects to the aggregate economy from surprises about financial intermediaries’ net worth based on a high-frequency identification strategy. We estimate that news of a 1% decline in intermediaries’ net worth leads to a 0.2%–0.4% decrease in the market value of nonfinancial firms. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E32, E4, E44, E5, E51, G, G0, G01, G1, G12, G2, G21, G23, G24, G3, G32 Research Theme(s): Financial markets and funds management, Market functioning, Financial system, Financial institutions and intermediation, Household and business credit, Monetary policy, Real economy and forecasting
Nowcasting Canadian GDP with Density Combinations Staff discussion paper 2022-12 Tony Chernis, Taylor Webley We present a tool for creating density nowcasts for Canadian real GDP growth. We demonstrate that the combined densities are a reliable and accurate tool for assessing the state of the economy and risks to the outlook. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C5, C52, C53, E, E3, E7 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Real economy and forecasting
Uncertainty and Monetary Policy Experimentation: Empirical Challenges and Insights from Academic Literature Staff discussion paper 2022-9 Matteo Cacciatore, Dmitry Matveev, Rodrigo Sekkel Central banks face considerable uncertainty when conducting monetary policy. The COVID-19 pandemic brought this issue back to the forefront of policy discussions. We draw from academic literature to review key sources of uncertainty and how they affect the conduct of monetary policy. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E3, E5 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation, Real economy and forecasting
Job Ladder and Business Cycles Staff working paper 2022-14 Felipe Alves During downturns, workers get stuck in low-productivity jobs and wages remain stagnant. I build an heterogenous agent incomplete market model with a full job ladder that accounts for these facts. An adverse financial shock calibrated to the US Great Recession replicates the period’s slow recovery and missing disinflation. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D3, D31, D5, D52, E, E2, E21, E24, E3, E31, E32 Research Theme(s): Models and tools, Economic models, Monetary policy, Real economy and forecasting, Structural challenges, Demographics and labour supply
Household Heterogeneity and the Performance of Monetary Policy Frameworks Staff working paper 2022-12 Edouard Djeutem, Mario He, Abeer Reza, Yang Zhang Consumption inequality and a low interest rate environment are two important trends in today’s economy. But the implications they may have—and how those implications interact—within different monetary policy frameworks are not well understood. We study the ranking of alternative frameworks that take these trends into account. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D3, D31, D5, D52, E, E2, E21, E3, E31, E5, E52, E58 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission
Macroeconomic Predictions Using Payments Data and Machine Learning Staff working paper 2022-10 James Chapman, Ajit Desai We demonstrate the usefulness of payment systems data and machine learning models for macroeconomic predictions and provide a set of econometric tools to overcome associated challenges. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C5, C53, C55, E, E3, E37, E4, E42, E5, E52 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Real economy and forecasting, Money and payments, Retail payments
The Impact of Globalization and Digitalization on the Phillips Curve Staff working paper 2022-7 Christian Friedrich, Peter Selcuk Globalization is in retreat, yet digitalization is on the rise. How will these trends impact inflation? Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E31, E32, F, F6 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting, Structural challenges, Digitalization and productivity, International trade, finance and competitiveness