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122 Results

Fiscal and Monetary Stabilization Policy at the Zero Lower Bound: Consequences of Limited Foresight

Staff Working Paper 2021-51 Michael Woodford, Yinxi Xie
How do outcomes of monetary and fiscal stabilization policies at the zero lower bound change when decision makers have finite planning horizons in the economy? We explore the effects of limited foresight on policy tools and the interaction between monetary and fiscal policy.

The Bank of Canada’s “Horse Race” of Alternative Monetary Policy Frameworks: Some Interim Results from Model Simulations

Staff Discussion Paper 2021-13 José Dorich, Rhys R. Mendes, Yang Zhang
Bank of Canada staff are running a “horse race” of alternative monetary policy frameworks in the lead-up to 2021 renewal of the Bank’s monetary policy framework. This paper summarizes some interim results of model simulations from their research.

Cash and COVID-19: The impact of the second wave in Canada

The COVID-19 pandemic significantly increased the demand for cash. Cash in circulation increased sharply from March through December 2020, particularly in the early months of this period. Although use of electronic methods of payment also increased significantly, cash use for payments remains high for low-value transactions and among certain demographic groups.

Stressed but not Helpless: Strategic Behaviour of Banks Under Adverse Market Conditions

Staff Working Paper 2021-35 Grzegorz Halaj, Sofia Priazhkina
Our stress-testing tool considers banks under stress that can strategically manage their balance sheets. Using confidential Canadian supervisory data, we assess whether bank behaviour to maximize shareholder value can amplify a hypothetical stress scenario.

Measuring and Evaluating Strategic Communications at the Bank of Canada

Staff Discussion Paper 2021-9 Annie Portelance
The Bank of Canada’s Communications Department has developed a framework to quantify and qualify the Bank’s communications efforts and their results. Using data-based measurement and evaluation, the department can assess the impact of the Bank’s communications activities and gauge the department’s contribution to the Bank’s overall goals.

A New Measure of Monetary Policy Shocks

Staff Working Paper 2021-29 Xu Zhang
Combining various high frequency financial data with central bank projections, I construct a new measure of monetary policy shocks not predictable by the public information preceding a central bank’s announcements. I then study the causal effects of monetary policy on the macro economy.

Shaping the future: Policy shocks and the GDP growth distribution

Can central bank and government policies impact the risks around the outlook for GDP growth? We find that fiscal stimulus makes strong GDP growth more likely—even more so when monetary policy is constrained—rather than weak GDP growth less likely. Thus, fiscal stimulus should accelerate the recovery phase of the COVID-19 pandemic.

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.

Eggs in One Basket: Security and Convenience of Digital Currencies

Staff Working Paper 2021-6 Charles M. Kahn, Francisco Rivadeneyra, Tsz-Nga Wong
Digital currencies store balances in anonymous electronic addresses. This paper analyzes the trade-offs between the safety and convenience of aggregating balances in addresses, electronic wallets and banks.
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