Exporting and Investment Under Credit Constraints Staff working paper 2023-10 Kim Huynh, Robert Petrunia, Joel Rodrigue, Walter Steingress We examine the relationship between firms’ performance and credit constraints affecting export market entry. Using administrative Canadian firm-level data, our findings show that new exporters (a) increase their productivity, (b) raise their leverage ratio and (c) increase investment. We estimate that 48 percent of Canadian manufacturers face binding credit constraints when deciding whether to enter export markets. Content Type(s): Staff research, Staff working papers JEL Code(s): F, F1, F10, F14, F3, F36, G, G2, G20, G28, G3, G32 Research Theme(s): Financial system, Financial institutions and intermediation, Household and business credit, Models and tools, Economic models, Structural challenges, International trade, finance and competitiveness
Fiscal Stimulus and Skill Accumulation over the Life Cycle Staff working paper 2023-9 Laure Simon Using micro data from the U.S. Consumer Expenditure Survey and Current Population Survey, I document that government spending shocks affect individuals differently over the life cycle. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D1, D12, D15, E, E2, E21, E6, E62, J, J1, J11, J2, J24 Research Theme(s): Models and tools, Economic models, Monetary policy, Real economy and forecasting, Structural challenges, Demographics and labour supply
Risk Amplification Macro Model (RAMM) Technical report No. 123 Kerem Tuzcuoglu The Risk Amplification Macro Model (RAMM) is a new nonlinear two-country dynamic model that captures rare but severe adverse shocks. The RAMM can be used to assess the financial stability implications of both domestic and foreign-originated risk scenarios. Content Type(s): Staff research, Technical reports JEL Code(s): C, C5, C51, E, E3, E37, E4, E44, F, F4, F44 Research Theme(s): Financial system, Financial stability and systemic risk, Models and tools, Economic models, Monetary policy, Real economy and forecasting
Gazing at r-star: A Hysteresis Perspective Staff working paper 2023-5 Paul Beaudry, Katya Kartashova, Césaire Meh Many explanations for the decline in real interest rates over the last 30 years point to the role that population aging or rising income inequality plays in increasing the long-run aggregate demand for assets. Notwithstanding the importance of such factors, the starting point of this paper is to show that the major change driving household asset demand over this period is instead an increased desire—for a given age and income level—to hold assets. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E21, E3, E31, E4, E43, E5, E52, E58, E6, E62, G, G5, G51, H, H6 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission, Real economy and forecasting
Macroeconomic Disasters and Consumption Smoothing: International Evidence from Historical Data Staff working paper 2023-4 Lorenzo Pozzi, Barbara Sadaba Does consumption smoothing fundamentally decrease during macroeconomic disasters? This paper uses a large historical dataset (1870–2016) for 16 industrial economies to show that during macroeconomic disasters (e.g., wars, pandemics, depressions) aggregate consumption and income are significantly less decoupled than during normal times. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C2, C23, E, E2, E21 Research Theme(s): Financial system, Household and business credit, Models and tools, Econometric, statistical and computational methods, Monetary policy, Real economy and forecasting
The 2021–22 Merchant Acceptance Survey Pilot Study Staff discussion paper 2023-1 Angelika Welte, Joy Wu The rise in digital payment innovations has spurred a discussion about the future of cash at the point of sale. The Bank conducted the 2021–22 Merchant Acceptance Survey Pilot Study to study trends in merchant cash acceptance and monitor conditions for the potential issuance of a central bank digital currency. Content Type(s): Staff research, Staff discussion papers JEL Code(s): C, C8, D, D2, D22, E, E4, L, L2 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Cash and bank notes, Digital assets and fintech, Retail payments
Simulating Intraday Transactions in the Canadian Retail Batch System Staff working paper 2023-1 Nellie Zhang This paper proposes a unique approach to simulate intraday transactions in the Canadian retail payments batch system when such transactions are unobtainable. The simulation procedure has potential for helping with data-deficient problems where only high-level aggregate information is available. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C6, C63, E, E4, E42, E5, E58 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Payment and financial market infrastructures
CANVAS: A Canadian Behavioral Agent-Based Model Staff working paper 2022-51 Cars Hommes, Mario He, Sebastian Poledna, Melissa Siqueira, Yang Zhang The Bank of Canada’s current suite of models faces challenges in addressing network effects that integrate household and firm-level heterogeneity and their behaviours. We develop CANVAS, a Canadian behavioural agent-based model to contribute to the Bank’s next-generation modelling effort. CANVAS improves forecasting performance and expands capacity for model-based scenario analysis. Content Type(s): Staff research, Staff working papers JEL Code(s): C, D, D2, D22, D8, D83, E, E1, E17 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission, Real economy and forecasting
Understanding Post-COVID Inflation Dynamics Staff working paper 2022-50 Martin Harding, Jesper Lindé, Mathias Trabandt We propose a macroeconomic model with a nonlinear Phillips curve that has a flat slope when inflationary pressures are subdued and steepens when inflationary pressures are elevated. Our model can generate more sizable inflation surges due to cost-push and demand shocks than a standard linearized model when inflation is high. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E30, E31, E32, E37, E4, E44, E5, E52 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission
Regulatory Requirements of Banks and Arbitrage in the Post-Crisis Federal Funds Market Staff working paper 2022-48 Rodney J. Garratt, Sofia Priazhkina This paper explains the nature of interest rates in the U.S. federal funds market after the 2007-09 financial crisis. We build a model of the over-the-counter lending market that incorporates new aspects of the financial system: abundance of liquidity, different regulatory standards for banks, and arbitrage opportunities created by limited access to the facility granting interest on excess reserves. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E42, E5, E58, G, G2, G28 Research Theme(s): Financial markets and funds management, Market functioning, Financial system, Financial system regulation and oversight, Models and tools, Economic models, Monetary policy, Monetary policy tools and implementation