D - Microeconomics

• Corporate investment and monetary policy transmission in Canada

  Staff Analytical Note 2020-26 Min Jae Kim, Jonathan Witmer

  Unexpected changes in interest rates lead small firms to materially change their investment rate. Large firms, in contrast, show a smaller response. This suggests both that financial conditions are an important channel for transmitting monetary policy and that firm characteristics can help us better understand fluctuations in business investment.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Firm dynamics, Monetary policy, Monetary policy transmission JEL Code(s): D, D2, D22, D9, D92, G, G3, G31, G32

• Production Networks and the Propagation of Commodity Price Shocks

  Staff Working Paper 2020-44 Shutao Cao, Wei Dong

  We examine the macro implications of commodity price shocks in a model with multiple production sectors that are interconnected within a commodity-exporting small open economy.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, International topics JEL Code(s): D, D5, D57, F, F4, F41

• Outside Investor Access to Top Management: Market Monitoring versus Stock Price Manipulation

  Staff Working Paper 2020-43 Josef Schroth

  Should managers be paid in stock options if they provide stock-market participants with information about the firm? This paper studies how firm owners trade off the benefit of stock-price incentives and better-informed market participants against the cost of potential stock-price manipulation.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Financial markets, Recent economic and financial developments JEL Code(s): D, D8, D82, D86, G, G1, G14, G3, G32, G34, M, M1, M12, M4, M41

• Forward Guidance and Expectation Formation: A Narrative Approach

  Staff Working Paper 2020-40 Christopher S. Sutherland

  How exactly does forward guidance influence interest rate expectations?

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Monetary policy, Monetary policy communications, Monetary policy transmission JEL Code(s): D, D8, D83, D84, E, E3, E37, E5, E52, E58

• Child Skill Production: Accounting for Parental and Market-Based Time and Goods Investments

  Staff Working Paper 2020-36 Elizabeth Caucutt, Lance Lochner, Joseph Mullins, Youngmin Park

  Can daycare replace parents’ time spent with children? We explore this by using data on how parents spend time and money on children and how this spending is related to their child’s development.

  Content Type(s): Staff research, Staff working papers Topic(s): Fiscal policy, Labour markets, Potential output, Productivity JEL Code(s): D, D1, D13, H, H3, H31, J, J2, J22, J24

• What do high-frequency expenditure network data reveal about spending and inflation during COVID‑19?

  Staff Analytical Note 2020-20 Kim Huynh, Helen Lao, Patrick Sabourin, Angelika Welte

  The official consumer price index (CPI) inflation measure, based on a fixed basket set before the COVID 19 pandemic, may not fully reflect what consumers are currently experiencing. We partnered with Statistics Canada to construct a more representative index for the pandemic with weights based on real-time transaction and survey data.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Inflation and prices, Payment clearing and settlement systems JEL Code(s): D, D1, D12, E, E3, E31, E4, E42, E5, E52

• The Canadian corporate investment gap

  Staff Analytical Note 2020-19 Chris D'Souza, Timothy Grieder, Daniel Hyun, Jonathan Witmer

  Business investment has been lower than expected in Canada and abroad since the financial crisis of 2007–09. This corporate investment gap is mirrored in firms’ other financing decisions, as they have increased cash holdings and dividend payments and decreased issuance of debt and equity.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Firm dynamics, Monetary policy transmission JEL Code(s): D, D2, D22, D9, D92, G, G3, G31, G32

• Why Do Central Banks Make Public Announcements of Open Market Operations?

  Staff Working Paper 2020-35 Narayan Bulusu

  Central banks communicate the results of open market operations. This helps participants in financial markets more accurately estimate the prevailing demand and supply conditions in the market for overnight loans.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Monetary policy implementation JEL Code(s): D, D5, D52, E, E5, E58, G, G2, G21

• The Interplay of Financial Education, Financial Literacy, Financial Inclusion and Financial Stability: Any Lessons for the Current Big Tech Era?

  Staff Working Paper 2020-32 Nicole Jonker, Anneke Kosse

  The objective of this paper is twofold. First, we assess whether financial education might be a suitable tool to promote the financial inclusion opportunities that big techs provide. Second, we study how this potential financial inclusion could impact financial stability.

  Content Type(s): Staff research, Staff working papers Topic(s): Development economics, Digital currencies and fintech, Financial markets, Financial services, Financial stability JEL Code(s): D, D1, D14, D9, D91, D92, G, G2, G21, G23, O, O1, O16

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

  Staff Working Paper 2020-30 Jasmina Arifovic, Cars Hommes, Anita Kopányi-Peuker, Isabelle Salle

  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