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135 Results

Digitalization and Inflation: A Review of the Literature

In the past few years, many have postulated that the possible disinflationary effects of digitalization could explain the subdued inflation in advanced economies. In this note, we review the evidence found in the literature. We look at three main channels.

Digital Transformation in the Service Sector: Insights from Consultations with Firms in Wholesale, Retail and Logistics

Staff Analytical Note 2017-19 Wei Dong, James Fudurich, Lena Suchanek
Firms increasingly rely on digital technologies such as e-commerce, cloud computing, big data, digital tracking and digital platforms that are reshaping business operations, business models and market structures. In this context, the Bank of Canada consulted with firms in wholesale, retail and logistics, as well as with related industry associations to yield insights on the adoption of digital technologies.
Content Type(s): Staff research, Staff analytical notes Topic(s): Firm dynamics, Inflation and prices, Service sector JEL Code(s): D, D2, D22, E, E3, E31, L, L8, L81, L9, L92, O, O3, O33

Global Factors and Inflation in Canada

Staff Analytical Note 2017-17 Dany Brouillette, Laurence Savoie-Chabot
This note investigates whether the recent weakness in inflation in Canada can be related to global factors not included in the current staff analytical framework (domestic slack, movements in commodity prices and in the exchange rate). A global common factor for inflation among selected advanced economies appears to contain marginal information for Canadian inflation beyond what is found in movements in commodity prices and the exchange rate.

Low Inflation in Advanced Economies: Facts and Drivers

Since the global financial crisis, core inflation has been persistently below target in most advanced economies. Recently, it has weakened further in several advanced economies despite gradually diminishing slack. This note reviews recent developments in core inflation across advanced economies and identifies distinctive patterns across regions.
Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, International topics JEL Code(s): E, E0, E3, E31, F, F0

Changes in Monetary Regimes and the Identification of Monetary Policy Shocks: Narrative Evidence from Canada

Staff Working Paper 2017-39 Julien Champagne, Rodrigo Sekkel
We use narrative evidence along with a novel database of real-time data and forecasts from the Bank of Canada's staff economic projections from 1974 to 2015 to construct a new measure of monetary policy shocks and estimate the effects of monetary policy in Canada.

Downward Nominal Wage Rigidity, Inflation and Unemployment: New Evidence Using Micro‐Level Data

Staff Analytical Note 2017-6 Dany Brouillette, Natalia Kyui
Recent evidence suggests that the extent of downward nominal wage rigidity (DNWR) in the Canadian labour market has risen following the 2008–09 recession (see Brouillette, Kostyshyna and Kyui 2016).

Should Central Banks Worry About Nonlinearities of their Large-Scale Macroeconomic Models?

Staff Working Paper 2017-21 Vadym Lepetyuk, Lilia Maliar, Serguei Maliar
How wrong could policymakers be when using linearized solutions to their macroeconomic models instead of nonlinear global solutions?

Price-Level Dispersion versus Inflation-Rate Dispersion: Evidence from Three Countries

Inflation can affect both the dispersion of commodity-specific price levels across locations (relative price variability, RPV) and the dispersion of inflation rates (relative inflation variability, RIV). Some menu-cost models and models of consumer search suggest that the RIV-inflation relationship could differ from the RPV-inflation relationship.
Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices JEL Code(s): E, E3, E31, E5, E50

Output Comovement and Inflation Dynamics in a Two-Sector Model with Durable Goods: The Role of Sticky Information and Heterogeneous Factor Markets

Staff Working Paper 2016-36 Tomiyuki Kitamura, Tamon Takamura
In a simple two-sector New Keynesian model, sticky prices generate a counterfactual negative comovement between the output of durable and nondurable goods following a monetary policy shock. We show that heterogeneous factor markets allow any combination of strictly positive price stickiness to generate positive output comovement.

Housing Market Dynamics and Macroprudential Policy

Staff Working Paper 2016-31 Gabriel Bruneau, Ian Christensen, Césaire Meh
We perform an analysis to determine how well the introduction of a countercyclical loanto- value (LTV) ratio can reduce household indebtedness and housing price fluctuations compared with a monetary policy rule augmented with house price inflation.