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222 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.

COVID-19 Crisis: Lessons Learned for Future Policy Research

One year later, we review the events that took place in Canadian fixed-income markets at the beginning of the COVID-19 crisis and propose potential policy research questions for future work.

Market Concentration and Uniform Pricing: Evidence from Bank Mergers

Staff Working Paper 2021-9 João Granja, Nuno Paixao
We show that US banks price deposits almost uniformly across their branches and that this pricing practice is more important than increases in local market concentration in explaining the deposit rate dynamics following bank mergers.

Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in Canada and the United States

Although credit cards are more expensive for merchants to accept than cash or debit cards, merchants typically pass through their costs evenly to all customers. Along with consumer card rewards and banking fees, this creates cross-subsidies between payment methods. Because higher-income individuals tend to use credit cards more than those with lower incomes, our results indicate that these cross-subsidies might lead to regressive distributional effects.

Estimating Policy Functions in Payments Systems Using Reinforcement Learning

We demonstrate the ability of reinforcement learning techniques to estimate the best-response functions of banks participating in high-value payments systems—a real-world strategic game of incomplete information.

Losing Contact: The Impact of Contactless Payments on Cash Usage

Staff Working Paper 2020-56 Marie-Hélène Felt
Because they mimic desirable features of cash and are typically used for smaller-value transactions, contactless payment cards are a competitive alternative to cash. This study investigates whether contactless credit cards are an important contributor to the decline in the transactional usage of cash, using Canadian panel data between 2010 and 2017.

A Reference Guide for the Business Outlook Survey

Staff Discussion Paper 2020-15 David Amirault, Naveen Rai, Laurent Martin
The Business Outlook Survey (BOS) has become an important part of monetary policy deliberations at the Bank of Canada and is also well known in Canadian policy and financial circles. This paper compiles more than 20 years of experience conducting the BOS and serves as a comprehensive reference manual.

Strategic Uncertainty in Financial Markets: Evidence from a Consensus Pricing Service

Staff Working Paper 2020-55 Lerby Ergun, Andreas Uthemann
We look at the informational content of consensus pricing in opaque over-the-counter markets. We show that the availability of price data informs participants mainly about other participants’ valuations, rather than about the value of a financial security.

Towards a HANK Model for Canada: Estimating a Canadian Income Process

Staff Discussion Paper 2020-13 Iskander Karibzhanov
How might one simulate a million realistic income paths and compute their statistical moments in under a second? Using CUDA-based methods to estimate the Canadian earnings process, I find that the distribution of labour income growth is sharply peaked with heavy tails—similar to that in the United States.
Content Type(s): Staff research, Staff discussion papers Topic(s): Economic models, Labour markets JEL Code(s): D, D3, D31, E, E2, E24, J, J3, J31