Search

We use a randomization of question placement in surveys to estimate the causal effect on financial literacy results. We find that financial literacy questions placed at the end of a survey lead to a drop in financial literacy of 5%–15%. This research suggests a measure of financial literacy adapted for survey length.

This note examines how monetary policy responses to shelter inflation affect both the overall economy and different households. We find that the aggregate macroeconomic effects of responding to shelter inflation are modest, whereas the redistributive consequences across households are substantially larger.

Analyzing TransUnion data from 2015–2024, this study identifies a systematic timeline of distress where rising credit utilization and non-mortgage arrears precede mortgage delinquency by up to two years. This deterioration intensifies in the final six months, providing a robust suite of high-frequency indicators for monitoring emerging household stress.

An economy with fixed amortization mortgages and borrowing-constrained consumers leads to the level of inflation targeted having real effects on home ownership, consumption, and debt. Using a life-cycle housing tenure choice model, we show that by front-loading real mortgage payments, higher inflation lowers steady-state home ownership and the mortgage-debt-to-income ratio.

When a bank holds a lot of safe assets, it is well situated to deal with funding stress. But when all banks hold a lot of safe assets, a pecuniary externality implies that their (wholesale) funding costs increase. This reduces banks’ ability to hold capital buffers and thus, paradoxically, increases the frequency of funding stress.

We provide a primer on the role of debt modelling in informing the sovereign debt issuance strategy and discuss how specific challenges faced by debt managers can influence model design decisions. These insights are supported by our experiences using the Canadian Debt Strategy Model to guide policy decisions.

We study the cross-section of equilibrium returns on safe assets using a tractable asset pricing model with a micro-founded demand for liquidity and multiple safe assets with heterogeneous transaction costs. We test the main predictions of our theory using a novel measure of relative (in)convenience yields in the US Treasury market.

In 2024, the Canadian Overnight Repo Rate Average (CORRA) rose 7 basis points above the Bank of Canada’s target overnight rate as settlement balances declined and hedge fund borrowing increased by $30 billion, straining dealers’ balance sheets. Exercising market power, dealers raised rates, and as client activity grew, these higher rates increasingly influenced CORRAs deviation from target.

I study the links between Canadian banks and non-bank financial intermediaries (NBFIs) by observing co-movements in stock prices. Perceived interconnections increased before the COVID-19 pandemic but have since stabilized, with the strongest ties seen between large banks and NBFIs. The secured credit line extended to Home Trust, a non-bank mortgage lender that experienced severe funding stress in 2017, significantly reduced banks' risk exposure to NBFIs during this episode.

We construct a dataset on Federal Reserve and Bank of Canada non-rate announcement events to provide novel insights into how foreign and domestic monetary policy communications affect the financial markets of open economies. We find that Fed non-rate communications have a stronger impact on long-term interest rates and stock futures, while Bank of Canada communications are relatively more important for short-term interest rates and the exchange rate.