E22 - Capital; Investment; Capacity

• What Do Survey Data Tell Us About US Businesses?

  Staff Working Paper 2019-45 Anmol Bhandari, Serdar Birinci, Ellen McGrattan, Kurt See

  This paper examines the reliability of survey data on business incomes, valuations, and rates of return, which are key inputs for studies of wealth inequality and entrepreneurial choice.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Business fluctuations and cycles, Firm dynamics JEL Code(s): C, C8, C83, E, E2, E22, H, H2, H25

• Lending Standards, Productivity and Credit Crunches

  Staff Working Paper 2019-25 Jonathan Swarbrick

  We propose a macroeconomic model in which adverse selection in investment drives the amplification of macroeconomic fluctuations, in line with prominent roles played by the credit crunch and collapse of the asset-backed security market in the financial crisis.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Financial markets, Financial stability, Interest rates, Productivity JEL Code(s): E, E2, E22, E3, E32, E4, E44, G, G0, G01

• Potential Output in Canada: 2019 Reassessment

  Staff Analytical Note 2019-10 Dany Brouillette, Julien Champagne, Carol Khoury, Natalia Kyui, Jeffrey Mollins, Youngmin Park

  Potential output is expected to grow on average at 1.8 per cent over 2019–21 and at 1.9 per cent in 2022. While the contribution of trend labour input to potential output growth is expected to decrease between 2019 and 2022, the contribution of trend labour productivity is projected to increase.

  Content Type(s): Staff Research, Staff Analytical Notes Topic(s): Labour markets, Potential output, Productivity JEL Code(s): E, E0, E00, E2, E22, E23, E24, E3, E37, E6

• Frictional Capital Reallocation I: Ex Ante Heterogeneity

  Staff Working Paper 2019-4 Randall Wright, Sylvia Xiaolin Xiao, Yu Zhu

  This paper studies dynamic general equilibrium models where firms trade capital in frictional markets. Gains from trade arise due to ex ante heterogeneity: some firms are better at investment, so they build capital in the primary market; others acquire it in the secondary market.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Monetary Policy JEL Code(s): E, E2, E22, E4, E44

• Can Capital Deepening Explain the Global Decline in Labor’s Share?

  Staff Working Paper 2019-3 Andrew Glover, Jacob Short

  We estimate an aggregate elasticity of substitution between capital and labor near or below one, which implies that capital deepening cannot explain the global decline in labor's share. Our methodology derives from transition paths in the neo-classical growth model.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Firm dynamics, International topics, Labour markets JEL Code(s): E, E1, E13, E2, E22, E25, J, J3

• The Role of Corporate Saving over the Business Cycle: Shock Absorber or Amplifier?

  Staff Working Paper 2018-59 Xiaodan Gao, Shaofeng Xu

  We document countercyclical corporate saving behavior with the degree of countercyclicality varying nonmonotonically with firm size. We then develop a dynamic stochastic general equilibrium model with heterogeneous firms to explain the pattern and study its implications for business cycles.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Business fluctuations and cycles, Economic models JEL Code(s): E, E2, E20, E22, E3, E32, G, G3, G31, G32

• Disaggregating Household Sensitivity to Monetary Policy by Expenditure Category

  Staff Analytical Note 2018-32 Tony Chernis, Corinne Luu

  Because the Bank of Canada has started withdrawing monetary stimulus, monitoring the transmission of these changes to monetary policy will be important. Subcomponents of consumption and housing will likely respond differently to a monetary policy tightening, both in terms of the aggregate effect and timing.

  Content Type(s): Staff Research, Staff Analytical Notes Topic(s): Business fluctuations and cycles, Domestic demand and components, Econometric and statistical methods, Housing, Interest rates, Recent economic and financial developments, Transmission of monetary policy JEL Code(s): C, C3, C32, E, E2, E21, E22, E4, E43, E47, E5, E52

• Characterizing Canada’s Export Sector by Industry: A Supply-Side Perspective

  Staff Analytical Note 2018-27 Taylor Webley

  This note examines supply-side trends in Canadian non-energy industries and their implications for export performance. Between 2002 and 2016, capital stocks and total labour input declined in many industries that export non-energy goods. These soft trends in the factors of production have likely contributed to the decline in non-energy exports in about half of the goods industries analyzed in this note.

  Content Type(s): Staff Research, Staff Analytical Notes Topic(s): International topics, Productivity JEL Code(s): E, E2, E22, E23, E24, F, F1, F19

• Potential Output in Canada: 2018 Reassessment

  Staff Analytical Note 2018-10 Andrew Agopsowicz, Dany Brouillette, Bassirou Gueye, Julien McDonald-Guimond, Jeffrey Mollins, Youngmin Park

  This note summarizes the reassessment of potential output, conducted by the Bank of Canada for the April 2018 Monetary Policy Report. Overall, the profile for potential output growth is expected to remain flat at 1.8 per cent between 2018 and 2020 and 1.9 per cent in 2021.

  Content Type(s): Staff Research, Staff Analytical Notes Topic(s): Labour markets, Potential output, Productivity JEL Code(s): E, E0, E00, E2, E22, E23, E24, E3, E37, E6

• Credit Crunches from Occasionally Binding Bank Borrowing Constraints

  Staff Working Paper 2017-57 Tom D. Holden, Paul Levine, Jonathan M. Swarbrick

  We present a model in which banks and other financial intermediaries face both occasionally binding borrowing constraints and costs of equity issuance. Near the steady state, these intermediaries can raise equity finance at no cost through retained earnings.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Economic models, Financial markets JEL Code(s): E, E2, E22, E3, E32, E5, E51, G, G2