How Do Households Respond to Expected Inflation? An Investigation of Transmission Mechanisms Staff working paper 2024-44 Janet Hua Jiang, Rupal Kamdar, Kelin Lu, Daniela Puzzello We conduct surveys to study how consumer spending responds to higher inflation expectations. Most respondents spend the same, sticking to fixed budget plans or not considering inflation for spending decisions. About 20% decrease spending because they feel poorer and cut spending to invest in inflation-proof assets. Very few increase spending. Content Type(s): Staff research, Staff working papers JEL Code(s): D, D1, D15, D8, D84, E, E2, E5, E52, E7 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission, Real economy and forecasting
Gender Gaps in Time Use and Entrepreneurship Staff working paper 2024-43 Pedro Bento, Lin Shao, Faisal Sohail The prevalence of entrepreneurs, particularly low-productivity non-employers, declines as economies develop. This decline is more pronounced for women. Relative to men, women are more likely to be entrepreneurs in poor economies but less likely in rich economies. Content Type(s): Staff research, Staff working papers JEL Code(s): J, J2, L, L2, O, O1 Research Theme(s): Monetary policy, Real economy and forecasting, Structural challenges, Demographics and labour supply, Digitalization and productivity
Monetary Policy Transmission amid Demand Reallocations Staff working paper 2024-42 Julien Bengui, Lu Han, Gaelan MacKenzie We analyze the transmission of monetary policy during different phases of a sectoral demand reallocation episode when there are frictions to increasing production in a sector. Monetary policy is more effective in reducing inflation when a larger proportion of sectors are expanding or expect to expand in the near future. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E1, E12, E2, E24, E3, E31, E5, E52 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission, Real economy and forecasting
Immigration and US Shelter Prices: The Role of Geographical and Immigrant Heterogeneity Staff working paper 2024-40 James Cabral, Walter Steingress The arrival of immigrants increases demand for housing and puts upward pressure on shelter prices. Using instrumental variables based on the ancestry composition of residents in US counties, we estimate the causal impact of immigration on local shelter prices. Content Type(s): Staff research, Staff working papers JEL Code(s): J, J6, J61, R, R2, R23, R3, R31 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting, Structural challenges, Demographics and labour supply
From Micro to Macro Hysteresis: Long-Run Effects of Monetary Policy Staff working paper 2024-39 Felipe Alves, Giovanni L. Violante We explore the long-run effects of a monetary policy shock in a Heterogeneous Agent New Keynesian model built on the micro evidence that job losses lead to persistently lower individual earnings through a combination of skill decay and abandonment of the labour force. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E21, E24, E3, E31, E32, E5, E52, J, J2, J24, J6, J64 Research Theme(s): Monetary policy, Monetary policy framework and transmission, Real economy and forecasting, Structural challenges, Demographics and labour supply
Beyond the averages: Measuring underlying wage growth using Labour Force Survey microdata Staff analytical note 2024-23 Fares Bounajm, Tessa Devakos, Gabriela Galassi When it comes to understanding the influence of labour costs on inflation, average wage growth is a misleading indicator because it is affected by composition effects. We propose an alternative measure that corrects for these effects by using microdata from the Labour Force Survey. Our new measure has many desirable properties, including reduced volatility and a better relationship with labour market fundamentals. Content Type(s): Staff research, Staff analytical notes JEL Code(s): C, C3, C31, J, J2, J21, J3, J30, J31, J8, J82 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting, Structural challenges, Demographics and labour supply
Household Food Inflation in Canada Staff working paper 2024-33 Olena Kostyshyna, Maude Ouellet We study food inflation rates for Canadian households during periods of low and high inflation from 2012Q4 to 2023Q4. Households experienced more varied inflation rates during the recent high inflation. Cumulative food inflation has been 2.2 percentage points higher for lower-income households than for highest-income households since the inflation surge. Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E21, E3, E30, E31, L, L8, L81 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Let’s Get Physical: Impacts of Climate Change Physical Risks on Provincial Employment Staff working paper 2024-32 Thibaut Duprey, Soojin Jo, Geneviève Vallée We analyze 40 years’ worth of natural disasters using a local projection framework to assess their impact on provincial labour markets in Canada. We find that disasters decrease hours worked within a week and lower wage growth in the medium run. Our study highlights that disasters affect vulnerable workers through the income channel. Content Type(s): Staff research, Staff working papers JEL Code(s): C, C3, C33, E, E2, E24, J, J3, Q, Q5, Q54 Research Theme(s): Monetary policy, Real economy and forecasting, Structural challenges, Climate change, Demographics and labour supply
Sources of pandemic-era inflation in Canada: An application of the Bernanke and Blanchard model Staff analytical note 2024-13 Fares Bounajm, Jean Garry Junior Roc, Yang Zhang We explore the drivers of the surge in inflation in Canada during the COVID-19 pandemic. This work is part of a joint effort by 11 central banks using the model developed by Bernanke and Blanchard (2023) to identify similarities and differences across economies. Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E2, E24, E3, E31, E37, E5, E52, E6 Research Theme(s): Models and tools, Economic models, Monetary policy, Inflation dynamics and pressures, Real economy and forecasting
Assessing the Impact of the Bank of Canada’s Government Bond Purchases Staff discussion paper 2024-5 Chinara Azizova, Jonathan Witmer, Xu Zhang In March 2020, the Bank of Canada implemented the Government of Canada Bond Purchase Program, eventually purchasing approximately $340 billion of government bonds. In this paper, we analyze the impact of this program on financial market prices and yields as well as on GDP and inflation. Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E5, E52, E58, G, G2, G21, G28 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission, Monetary policy tools and implementation, Real economy and forecasting