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18 Results

How Long is Forever in the Laboratory? Three Implementations of an Infinite-Horizon Monetary Economy

Staff Working Paper 2021-16 Janet Hua Jiang, Daniela Puzzello, Cathy Zhang
Standard monetary models adopt an infinite horizon with discounting. Testing these models in the lab requires implementing this horizon within a limited time frame. We compare three approaches to such an implementation and discuss their relative advantages.

Cash and COVID-19: The Effects of Lifting Containment Measures on Cash Demand and Use

Staff Discussion Paper 2021-3 Heng Chen, Walter Engert, Kim Huynh, Gradon Nicholls, Julia Zhu
Using Bank Note Distribution System data on the demand for cash up to September 2020, we find that demand was strong. This is true even though cash use for payments declined early in the pandemic. When mobility restrictions and lockdown measures were eased, cash use for payments increased sharply but remained less popular than electronic methods of payment.

2019 Cash Alternative Survey Results

Staff Discussion Paper 2020-8 Kim Huynh, Gradon Nicholls, Mitchell Nicholson
The role of cash in Canadians’ lives has been evolving, as innovations in digital payments have become more widely adopted over the past decade. We contribute to the Bank of Canada’s research on central bank digital currency by monitoring Canadians’ use of cash and their adoption of digital payment methods.

Ten Isn’t Large! Group Size and Coordination in a Large-Scale Experiment

Economic activities typically involve coordination among a large number of agents. These agents have to anticipate what other agents think before making their own decisions.
Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, Financial stability JEL Code(s): C, C9, C92, D, D8, D83, D9, D90, G, G2, G20

Cash and COVID-19: The impact of the pandemic on demand for and use of cash

Consumer spending declined significantly during the recent COVID-19 pandemic. This negative shock likely reduced spending across all methods of payment (cash, debit, credit, etc.). The mix of payment methods consumers use could also be affected. We study how the pandemic has influenced the demand for and use of cash. We also offer insights into the use of other payment methods, such as debit and credit cards.

Monetary Payoff and Utility Function in Adaptive Learning Models

Staff Working Paper 2019-50 Erhao Xie
When players repeatedly face an identical or similar game (e.g., coordination game, technology adoption game, or product choice game), they may learn through experience to perform better in the future. This learning behaviour has important economic implications.

The Formation of House Price Expectations in Canada: Evidence from a Randomized Information Experiment

Staff Analytical Note 2019-24 Marc-André Gosselin, Mikael Khan, Matthieu Verstraete
We conduct a randomized information experiment leveraging the Canadian Survey of Consumer Expectations. We provide causal evidence that respondents revise both their short- and medium-term expectations of future house price growth in a way that is consistent with observed short-term momentum in house prices. However, empirically, house price growth tends to revert to its mean in the medium term.
Content Type(s): Staff research, Staff analytical notes Topic(s): Financial stability, Housing JEL Code(s): C, C9, D, D8, D84, R, R2, R21

Are Long-Horizon Expectations (De-)Stabilizing? Theory and Experiments

Staff Working Paper 2019-27 George Evans, Cars Hommes, Isabelle Salle, Bruce McGough
Most models in finance assume that agents make trading plans over the infinite future. We consider instead that they are boundedly rational and may only form forecasts over a limited horizon.

Central Bank Communication That Works: Lessons from Lab Experiments

Staff Working Paper 2019-21 Oleksiy Kryvtsov, Luba Petersen
We use controlled laboratory experiments to test the causal effects of central bank communication on economic expectations and to distinguish the underlying mechanisms of those effects. In an experiment where subjects learn to forecast economic variables, we find that central bank communication has a stabilizing effect on individual and aggregate outcomes and that the size of the effect varies with the type of communication.