Adoption of Digital Technologies: Insights from a Global Survey Initiative Staff Discussion Paper 2021-7 James Fudurich, Lena Suchanek, Lise Pichette Firms are at the forefront of adopting new technology. Using survey data from a global network of central banks, we assess the effects of digitalization on firms’ pricing and employment decisions. Content Type(s): Staff research, Staff discussion papers Topic(s): Firm dynamics, Inflation and prices, Labour markets JEL Code(s): D, D2, D22, E, E3, E31, J, J2, J21, O, O3, O33
Update on housing market imbalances and household indebtedness Staff Analytical Note 2021-4 Mikael Khan, Olga Bilyk, Matthew Ackman Exceptional strength in the housing market during the pandemic is underpinning Canada’s economic recovery. However, two key vulnerabilities—housing market imbalances and elevated household indebtedness—have intensified. Content Type(s): Staff research, Staff analytical notes Topic(s): Coronavirus disease (COVID-19), Credit and credit aggregates, Financial stability, Housing, Recent economic and financial developments, Sectoral balance sheet JEL Code(s): D, D1, D14, D8, D84, E, E5, G, G2, G21, G28, R, R2, R21
Stablecoin Assessment Framework Staff Discussion Paper 2021-6 Alejandro García, Bena Lands, Dennis Yanchus We offer relevant authorities a three-step assessment framework they can use to understand, identify and quantify the risks associated with stablecoin and other cryptocurrency arrangements. Content Type(s): Staff research, Staff discussion papers Topic(s): Digital currencies and fintech, Financial institutions, Financial markets, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): D, D7, D78, D8, D81, G, G0, G01, G1, G18, O, O3, O38
Trade and Market Power in Product and Labor Markets Staff Working Paper 2021-17 Gaelan MacKenzie Trade liberalizations increase the sales and input purchases of productive firms relative to their less productive domestic competitors. This reallocation affects firms’ market power in their product and input markets. I quantify how the labour market power of employers affects the distribution and size of the gains from trade. Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Labour markets, Market structure and pricing, Productivity, Trade integration JEL Code(s): D, D4, D43, F, F1, F12, F6, J, L, L1, L13
How Long is Forever in the Laboratory? Three Implementations of an Infinite-Horizon Monetary Economy Staff Working Paper 2021-16 Janet Hua Jiang, Daniela Puzzello, Cathy Zhang Standard monetary models adopt an infinite horizon with discounting. Testing these models in the lab requires implementing this horizon within a limited time frame. We compare three approaches to such an implementation and discuss their relative advantages. Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Economic models, Inflation and prices JEL Code(s): C, C9, C92, D, D8, D83, E, E4, E40
COVID-19 Crisis: Lessons Learned for Future Policy Research Staff Discussion Paper 2021-2 Jean-Sébastien Fontaine, Corey Garriott, Jesse Johal, Jessica Lee, Andreas Uthemann One year later, we review the events that took place in Canadian fixed-income markets at the beginning of the COVID-19 crisis and propose potential policy research questions for future work. Content Type(s): Staff research, Staff discussion papers Topic(s): Coronavirus disease (COVID-19), Financial markets, Monetary policy JEL Code(s): D, D4, D47, E, E4, E41, E5, G, G0, G01, G1, G14, G2, G20, G21, G23
Market Concentration and Uniform Pricing: Evidence from Bank Mergers Staff Working Paper 2021-9 João Granja, Nuno Paixao We show that US banks price deposits almost uniformly across their branches and that this pricing practice is more important than increases in local market concentration in explaining the deposit rate dynamics following bank mergers. Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Financial system regulation and policies, Market structure and pricing JEL Code(s): D, D4, G, G2, G20, G21, G28, G3, G34, L, L1, L11
Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in Canada and the United States Staff Working Paper 2021-8 Marie-Hélène Felt, Fumiko Hayashi, Joanna Stavins, Angelika Welte Although credit cards are more expensive for merchants to accept than cash or debit cards, merchants typically pass through their costs evenly to all customers. Along with consumer card rewards and banking fees, this creates cross-subsidies between payment methods. Because higher-income individuals tend to use credit cards more than those with lower incomes, our results indicate that these cross-subsidies might lead to regressive distributional effects. Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Financial institutions, Financial services, Market structure and pricing, Payment clearing and settlement systems JEL Code(s): D, D1, D12, D2, D23, D3, D31, E, E4, E42, G, G2, G21, L, L8, L81
Estimating Policy Functions in Payments Systems Using Reinforcement Learning Staff Working Paper 2021-7 Pablo S. Castro, Ajit Desai, Han Du, Rodney Garratt, Francisco Rivadeneyra We demonstrate the ability of reinforcement learning techniques to estimate the best-response functions of banks participating in high-value payments systems—a real-world strategic game of incomplete information. Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Financial institutions, Financial system regulation and policies, Payment clearing and settlement systems JEL Code(s): A, A1, A12, C, C7, D, D8, D83, E, E4, E42, E5, E58
Allocative Efficiency and Aggregate Productivity Growth in Canada and the United States Staff Working Paper 2021-1 Lin Shao, Rongsheng Tang The lack of improvement in allocative efficiency plays a quantitatively important role in the productivity slowdown in the United States and the widening Canada–US productivity gap. Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Productivity JEL Code(s): C, C6, C67, D, D4, D5, D57, E, E2, E23