Understanding Firms’ Inflation Expectations Using the Bank of Canada’s Business Outlook Survey Staff Working Paper 2016-7 Simon Richards, Matthieu Verstraete Inflation expectations are a key determinant of actual and future inflation and thus matter for the conduct of monetary policy. We study how firms form their inflation expectations using quarterly firm-level data from the Bank of Canada’s Business Outlook Survey, spanning the 2001 to 2015 period. Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Credibility, Econometric and statistical methods, Firm dynamics, Inflation and prices, Inflation targets, Monetary policy framework JEL Code(s): C, C1, C2, C25, D, D2, D21, D8, D84, E, E3, E31, E5, E52, E58
Macroeconomic Uncertainty Through the Lens of Professional Forecasters Staff Working Paper 2016-5 Soojin Jo, Rodrigo Sekkel We analyze the evolution of macroeconomic uncertainty in the United States, based on the forecast errors of consensus survey forecasts of different economic indicators. Comprehensive information contained in the survey forecasts enables us to capture a real-time subjective measure of uncertainty in a simple framework. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Econometric and statistical methods JEL Code(s): C, C3, C38, E, E1, E17, E3, E32
Monetary Commitment and the Level of Public Debt Staff Working Paper 2016-3 Stefano Gnocchi, Luisa Lambertini We analyze the interaction between committed monetary policy and discretionary fiscal policy in a model with public debt, endogenous government expenditures, distortive taxation and nominal rigidities. Content Type(s): Staff research, Staff working papers Research Topic(s): Credibility, Fiscal policy, Inflation targets, Monetary policy framework JEL Code(s): E, E2, E24, E3, E32, E5, E52
What Is Behind the Weakness in Global Investment? Staff Discussion Paper 2016-5 Maxime Leboeuf, Robert Fay The recovery in private business investment globally remains extremely weak more than seven years after the financial crisis. This paper contributes to the ongoing policy debate on the factors behind this weakness by analyzing the role of growth prospects and uncertainty in explaining developments in non-residential private business investment in large advanced economies since the crisis. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Business fluctuations and cycles, Central bank research, Domestic demand and components, Economic models, International topics, Monetary policy and uncertainty, Recent economic and financial developments JEL Code(s): C, C2, C23, C3, C33, D, D2, D24, D8, D80, D84, E, E2, E22, F, F0, F01, G, G3, G31
New Housing Registrations as a Leading Indicator of the BC Economy Staff Discussion Paper 2016-3 Calista Cheung, Dmitry Granovsky Housing starts and building permits data are commonly used as leading indicators of economic activity. In British Columbia, all new homes must be registered with the Homeowner Protection Office, a branch of BC Housing, before the issuance of building permits and the start of construction. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Business fluctuations and cycles, Housing, Regional economic developments JEL Code(s): C, C1, C13, C5, C53, E, E3, E32, E37
Agency Costs, Risk Shocks and International Cycles Staff Working Paper 2016-2 Marc-André Letendre, Joel Wagner We add agency costs as in Carlstrom and Fuerst (1997) into a two-country, two-good international business-cycle model. In our model, changes in the relative price of investment arise endogenously. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, International topics JEL Code(s): E, E2, E22, E3, E32, E4, E44, F, F4, F44
Reconciling the Differences in Aggregate U.S. Wage Series Staff Working Paper 2016-1 Julien Champagne, André Kurmann, Jay Stewart Average hourly real wage series from the Labor Productivity and Costs (LPC) program and the Current Employment Statistics (CES) program have evolved very differently over the past decades. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Labour markets JEL Code(s): E, E0, E01, E2, E24, E3, E30, J, J3, J30
Extending the Labour Market Indicator to the Canadian Provinces Staff Discussion Paper 2016-2 Alexander Fritsche, Katherine Ragan Calculating the labour market indicator (LMI) at the provincial level provides useful insights into Canada’s regional economies and reveals differing trends in the state of underlying labour market conditions across provinces. Conclusions based on the Canadian LMI do not necessarily translate to the provinces. In most cases, the correlations between the provincial LMIs and the underlying labour market variables have the expected sign. Content Type(s): Staff research, Staff discussion papers Research Topic(s): Labour markets, Recent economic and financial developments JEL Code(s): E, E2, E24, E27, J, J2, J21, J23
The Complex Adjustment of the Canadian Economy to Lower Commodity Prices Staff Analytical Note 2016-1 Julien Champagne, Nikita Perevalov, Hope Pioro, Dany Brouillette, Andrew Agopsowicz In this analytical note, we provide a comprehensive assessment of the complex structural adjustment facing the Canadian economy following the commodity price decline since mid-2014. We quantify separately the impacts coming from the commodity sector restructuring and the broader effect of significantly lower terms of trade. Content Type(s): Staff research, Staff analytical notes Research Topic(s): Business fluctuations and cycles, Exchange rates, Labour markets, Potential output, Recent economic and financial developments JEL Code(s): E, E1, E17, E2, E27, E5, E52, J, J2, Q, Q0, Q00
December 15, 2015 Indebted Households and Potential Vulnerabilities for the Canadian Financial System: A Microdata Analysis Financial System Review - December 2015 Gino Cateau, Tom Roberts, Jie Zhou Over the past decade, an increasing proportion of households in Canada have become highly indebted relative to their income. These highly indebted households now hold one-fifth of total Canadian household debt.Simulations suggest that this greater degree of household indebtedness could exacerbate the impact of shocks to income and interest rates relative to the pre-crisis period. However, an assessment of the vulnerability of the Canadian financial system should, among other factors, account for the ability of Canadian financial institutions to withstand losses from the household sector. Content Type(s): Publications, Financial System Review articles Research Topic(s): Credit and credit aggregates, Financial stability, Housing, Recent economic and financial developments JEL Code(s): D, D1, D14, E, E5, E51