Applying the Wage-Common to Canadian Provinces Staff analytical note 2018-16 Jonathan Lachaine As at the national level, available sources of hourly wage data for Canadian provinces sometimes send conflicting signals about wage growth. This note has two objectives. First, we develop a common measure of provincial wages (the provincial wage-common) to better capture the underlying wage pressures, reflecting the overall trend across all data sources. Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C3, C38, J, J3 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures, Structural challenges, Demographics and labour supply
Bending the Curves: Wages and Inflation Staff analytical note 2018-15 Dany Brouillette, Madigan Dockrill, Helen Lao, Laurence Savoie-Chabot As economic slack continues to be absorbed and the labour market tightens, wage growth and inflation could increase faster than expected, which would suggest convexity in their Phillips curves. This note investigates whether there is convexity in the Phillips curves for Canadian wage growth and inflation by testing different empirical approaches over the post-inflation-targeting period. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E2, E24, E3, E31, J, J3 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Could a Higher Inflation Target Enhance Macroeconomic Stability? Staff working paper 2018-17 José Dorich, Nicholas Labelle, Vadym Lepetyuk, Rhys R. Mendes Recent international experience with the effective lower bound on nominal interest rates has rekindled interest in the benefits of inflation targets above 2 per cent. We evaluate whether an increase in the inflation target to 3 or 4 per cent could improve macroeconomic stability in the Canadian economy. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E32, E37, E4, E43, E5, E52 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission
State Correlation and Forecasting: A Bayesian Approach Using Unobserved Components Models Staff working paper 2018-14 Luis Uzeda Implications for signal extraction from specifying unobserved components (UC) models with correlated or orthogonal innovations have been well investigated. In contrast, the forecasting implications of specifying UC models with different state correlation structures are less well understood. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C1, C11, C15, C5, C51, C53 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Did U.S. Consumers Respond to the 2014–2015 Oil Price Shock? Evidence from the Consumer Expenditure Survey Staff working paper 2018-13 Patrick Alexander, Louis Poirier The impact of oil price shocks on the U.S. economy is a topic of considerable debate. In this paper, we examine the response of U.S. consumers to the 2014–2015 negative oil price shock using representative survey data from the Consumer Expenditure Survey. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D1, D12, E, E2, E21, Q, Q4, Q43 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Dismiss the Gap? A Real-Time Assessment of the Usefulness of Canadian Output Gaps in Forecasting Inflation Staff working paper 2018-10 Lise Pichette, Marie-Noëlle Robitaille, Mohanad Salameh, Pierre St-Amant We use a new real-time database for Canada to study various output gap measures. This includes recently developed measures based on models incorporating many variables as inputs (and therefore requiring real-time data for many variables). Content Type(s): Staff research, Staff working papers JEL Code(s): C, C5, C53, E, E3, E37 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Non-linéarité de la courbe de Phillips : un survol de la littérature Staff analytical note 2018-3 Renaud St-Cyr The paper reviews evidence from the economic literature on the nature of the relationship between excess capacity and inflation, better known as the Phillips curve. In particular, we examine the linearity of this relationship. This is an important issue in the current economic context in which advanced economies are approaching or exceed their potential output. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E3, E31, E32 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Modeling Fluctuations in the Global Demand for Commodities Staff working paper 2018-4 Lutz Kilian, Xiaoqing Zhou It is widely understood that the real price of globally traded commodities is determined by the forces of demand and supply. One of the main determinants of the real price of commodities is shifts in the demand for commodities associated with unexpected fluctuations in global real economic activity. Content Type(s): Staff research, Staff working papers JEL Code(s): F, F4, F44, Q, Q1, Q11, Q3, Q31, Q4, Q41, Q43 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting, Structural challenges, International trade, finance and competitiveness
Wages: Measurement and Key Drivers Staff analytical note 2018-2 Dany Brouillette, Jonathan Lachaine, Benoit Vincent Available sources of hourly wage data in Canada sometimes send conflicting signals about wage growth. This note thus has two objectives: first, we develop a wage measure—the wage-common—to better capture the (underlying) wage pressures reflecting the common trend across the available data sources. Second, we re-examine the relationship between wage growth and macro drivers (labour market slack and labour productivity). Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C3, C38, J, J3 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures, Structural challenges, Demographics and labour supply
The Impacts of Minimum Wage Increases on the Canadian Economy Staff analytical note 2017-26 Dany Brouillette, Daniel Gao, Olivier Gervais, Calista Cheung This note reviews the channels through which scheduled minimum wage increases over the coming years may affect Canadian economic activity and inflation and assesses their macroeconomic impacts. From reduced-form estimates of direct minimum wage pass-through, we find that consumer price index (CPI) inflation could be boosted by about 0.1 percentage point (pp) on average in 2018. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E2, E24, J, J2, J21, J22, J23 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting