We use controlled laboratory experiments to test the causal effects of central bank communication on economic expectations and to distinguish the underlying mechanisms of those effects. In an experiment where subjects learn to forecast economic variables, we find that central bank communication...

This note examines the merits of monetary policy adjustments in response to financial stability concerns, taking into account changes in the state of knowledge since the renewal of the inflation-targeting agreement in 2011. A key financial system vulnerability in Canada is elevated household...

The rise in inflation in 2021-22 sparked a growing literature and debate over the causes of the surge as well as the near- and medium-term path for inflation. This review offers three key messages. First, the exceptional nature of shocks resulting from the COVID-19 pandemic and geopolitical...

We study how the interaction of market power and nominal price rigidity influences inflation dynamics. We formulate a tractable model of oligopolistic competition and sticky prices and derive closed-form expressions for the pass-through of idiosyncratic and common cost shocks to firms' prices....

For most of 2011-19, inflation in Canada and advanced economies registered below inflation targets. This has spurred a debate on whether "lowflation" is a temporary phenomenon or rather a sign of a fundamental change in inflation behaviour-in Canada and globally. So far, we know little. Global...

Standard theories of price adjustment are based on the problem of a single-product firm, and therefore they may not be well suited to analyze price dynamics in the economy with multiproduct firms. To guide new theory, we study a unique dataset with comprehensive coverage of daily prices in large...

We use a detailed micro dataset on product availability to construct a direct high frequency measure of consumer product shortages during the 2020-21 pandemic. We document a widespread multi-fold rise in shortages in nearly all sectors early in the pandemic. Over time, the composition of...

Price selection is a simple, model-free measure of selection in price setting and its contribu- tion to in ation dynamics. It exploits comovement between in ation and the level from which adjusting prices departed. Prices that increase from lower-than-usual levels tend to push in a- tion above...

We study a unique dataset with comprehensive coverage of daily prices in large multi-product retailers in Israel. Retail stores synchronize price changes around occasional "peak" days when they reprice around 10% of their products. To assess aggregate implications of partial price...

We measure soft information contained in the congressional testimonies of U.S. Federal Reserve Chairs and analyze its effect on financial markets. Our measures of Fed Chairs' emotions expressed in words, voice and facial expressions are created using machine learning. Increases in the Chair's...