Risk Sharing in the Presence of a Public Good Staff Working Paper 2015-27 Josef Schroth This paper studies an economy where agents can spend resources on consuming a private good and on funding a public good. There is asymmetric information regarding agents’ relative preference for private versus public good consumption. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial stability, Financial system regulation and policies, Fiscal policy JEL Code(s): D, D8, D82, D86, E, E6, E62, H, H2, H21, H23, H7, H77
Sheltered Income: Estimating Income Under-Reporting in Canada, 1998 and 2004 Staff Working Paper 2015-22 Geoffrey R. Dunbar, Chunling Fu We use data from the Survey of Financial Security and the Survey of Household Spending to estimate the incidence and extent of income under-reporting in Canada in 1998 and 2004. We estimate that the proportion of households under-reporting income is roughly 35 to 50 per cent in both years. Content Type(s): Staff research, Staff working papers Research Topic(s): Domestic demand and components JEL Code(s): H, H2, H26, I, I3, I32, K, K4, K42
Funding Liquidity, Market Liquidity and the Cross-Section of Stock Returns Staff Working Paper 2015-12 Jean-Sébastien Fontaine, René Garcia, Sermin Gungor Following theory, we check that funding risk connects illiquidity, volatility and returns in the cross-section of stocks. We show that the illiquidity and volatility of stocks increase with funding shocks, while contemporaneous returns decrease with funding shocks. Content Type(s): Staff research, Staff working papers Research Topic(s): Asset pricing, Financial markets JEL Code(s): E, E4, E43, H, H1, H12
Housing and Tax Policy Staff Working Paper 2013-33 Sami Alpanda, Sarah Zubairy In this paper, we investigate the effects of housing-related tax policy measures on macroeconomic aggregates using a dynamic general-equilibrium model. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Fiscal policy, Housing JEL Code(s): E, E6, E62, H, H2, H24, R, R3, R38
Analyzing Fiscal Sustainability Staff Working Paper 2013-27 Huixin Bi, Eric M. Leeper The authors study the implications of fiscal policy behaviour for sovereign risk in a framework that determines a country’s fiscal limit, the point at which, for economic or political reasons, taxes and spending can no longer adjust to stabilize debt. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Fiscal policy JEL Code(s): E, E6, E62, E65, H, H6, H63
Uncertain Fiscal Consolidations Staff Working Paper 2013-26 Huixin Bi, Eric M. Leeper, Campbell Leith The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition - either tax- or spending-based - are uncertain. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Fiscal policy, Monetary policy and uncertainty JEL Code(s): E, E6, E62, E63, H, H3, H30, H6, H60
February 23, 2012 Household Borrowing and Spending in Canada Bank of Canada Review - Winter 2011-2012 Jeannine Bailliu, Katya Kartashova, Césaire Meh Understanding how much of the increased debt load of Canadian households has been used to finance household spending on consumption and home renovation is important for the conduct of monetary policy. In this article, the authors use a comprehensive data set that provides information on the uses of debt by Canadian households. They first present some facts regarding the evolution of Canadian household debt over the period from 1999 to 2010, emphasizing the increased importance of debt flows that are secured by housing. They then explore how Canadian households have used their borrowed funds over the same period, and assess the role of these borrowed funds in financing total consumption and spending on home renovation. Finally, they examine the possible effects of a decline in house prices on consumption when housing equity is used as collateral against household indebtedness. Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Credit and credit aggregates, Domestic demand and components, Monetary policy transmission JEL Code(s): E, E2, E21, E5, E51, H, H3, H31
Fixed-Term and Permanent Employment Contracts: Theory and Evidence Staff Working Paper 2011-21 Shutao Cao, Enchuan Shao, Pedro Silos This paper constructs a theory of the coexistence of fixed-term and permanent employment contracts in an environment with ex-ante identical workers and employers. Workers under fixed-term contracts can be dismissed at no cost while permanent employees enjoy labor protection. Content Type(s): Staff research, Staff working papers Research Topic(s): Labour markets, Potential output, Productivity JEL Code(s): H, H2, H29, J, J2, J23, J3, J38
The Canadian Debt-Strategy Model: An Overview of the Principal Elements Staff Discussion Paper 2011-3 David Bolder, Simon Deeley The Canadian Debt Strategy Model helps debt managers determine their optimal financing strategy. The model’s code and documentation are available to the public. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Debt management, Econometric and statistical methods, Financial markets, Fiscal policy JEL Code(s): C, C0, G, G1, G11, G17, H, H6, H63
Sovereign Default Risk Premia, Fiscal Limits and Fiscal Policy Staff Working Paper 2011-10 Huixin Bi We develop a closed economy model to study the interactions among sovereign risk premia, fiscal limits, and fiscal policy. The stochastic fiscal limits, which measure the ability and willingness of the government to service its debt, arise endogenously from a dynamic Laffer curve. Content Type(s): Staff research, Staff working papers Research Topic(s): Fiscal policy, International topics JEL Code(s): E, E6, E62, H, H3, H30, H6, H60