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59 Results

COVID and Financial Stability: Practice Ahead of Theory

Staff Discussion Paper 2022-18 Jing Yang, Hélène Desgagnés, Grzegorz Halaj, Yaz Terajima
The Covid-19 pandemic uncovered policy challenges related to the economic measures that were taken to support the economy. Two years later, we attempt to identify the broader impact of these measures and research that needs to follow.

Revisiting the Monetary Sovereignty Rationale for CBDCs

Staff Discussion Paper 2021-17 Skylar Brooks
One argument for central bank digital currencies (CBDCs) is that without them, private and foreign digital monies could displace domestic currencies, threatening the central bank’s monetary policy and lender of last resort capabilities. I revisit this monetary sovereignty rationale and offer a wider view—one that considers a broader set of currency functions and captures important cross-country variation.

Fiscal Spillovers: The Case of US Corporate and Personal Income Taxes

Staff Working Paper 2021-41 Madeline Hanson, Daniela Hauser, Romanos Priftis
How do changes to personal and corporate income tax rates in the United States affect its trading partners? Spillover effects from cuts in the two taxes differ. They are generally small and negative for corporate taxes, but sizable and positive for personal income taxes.

The Side Effects of Safe Asset Creation

Staff Working Paper 2021-34 Sushant Acharya, Keshav Dogra
The secular decline in real interest rates has created a challenge for monetary policy, now confronting the zero lower bound more often. An increase in the supply of safe assets reduces downward pressure on the natural interest rate. This allows monetary policy to reach price stability and full employment, but not without cost—permanently lower investment.
Content Type(s): Staff research, Staff working papers Topic(s): Fiscal policy, Monetary policy implementation JEL Code(s): E, E3, E4, E5, G, G1, H, H6

Monetary Policy, Trends in Real Interest Rates and Depressed Demand

Staff Working Paper 2021-27 Paul Beaudry, Césaire Meh
Over the last few decades, real interest rates have trended downward. The most common explanation is that this reflects depressed demand due to demographic, technological and other real factors. We explore the claim that these trends may have been amplified by certain features of monetary policy.

Labor Demand Response to Labor Supply Incentives: Lessons from the German Mini-Job Reform

Staff Working Paper 2021-15 Gabriela Galassi
How do firms change their employment decisions when tax benefits for low-earning workers are expanded? Some firms increase employment overall, whereas others replace high-earning workers with low-earning workers, according to German linked employer-employee data.
Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Firm dynamics, Labour markets JEL Code(s): E, E2, E24, E6, E64, H, H2, H20, H24, H3, H32, I, I3, I38, J, J2, J23, J3, J38

Debt-Relief Programs and Money Left on the Table: Evidence from Canada's Response to COVID-19

Staff Working Paper 2021-13 Jason Allen, Robert Clark, Shaoteng Li, Nicolas Vincent
During the COVID-19 pandemic, Canadian financial institutions offered debt-relief programs to help borrowers cope with job losses and economic insecurity. We consider the low take-up rates for these programs and suggest that to be effective, such programs must be visible and easy to use.

The Bank of Canada COVID‑19 stringency index: measuring policy response across provinces

We construct an index that systematically measures and tracks the stringency of government policy responses to the COVID-19 pandemic across Canadian provinces. Researchers can use this stringency index to analyze how the pandemic is affecting the economy.

A Macroeconomic Model of an Epidemic with Silent Transmission and Endogenous Self-isolation

Staff Working Paper 2020-50 Antonio Diez de los Rios
We study the interaction between epidemics and economic decisions in a model that has silent transmission of the virus. We find that rational behaviour strongly diminishes the severity of the epidemic but worsens the economic recession. We also find that the detection and isolation of not only symptomatic individuals but also those who are infected and asymptomatic or mildly symptomatic can reduce the severity of the recession caused by the pandemic.
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