We explain how the Bank of Canada's policy models capture the trade-off between output and inflation in Canada. We start by briefly revisiting the determinants of the New Keynesian Phillips curve. Next, we provide an overview of the Phillips curves that are currently embedded in the two main...

We develop a Canadian behavioral agent-based model (CANVAS) that utilizes Canadian micro- and macroeconomic data for forecasting and policy analysis. CANVAS represents a next-generation modelling effort, as it improves upon the previous generation of models in three dimensions: introducing...

Elevated inflation can threaten the credibility of central banks and increase the risk that inflation expectations do not remain anchored. Wage-price spirals might develop in such an environment, and high inflation could become entrenched. We quantitively assess the risks of a wage-price spiral...

This paper analyses the post-pandemic inflation dynamics in Canada using a behavioral macroeconomic model of the Bank of Canada. Two crucial behavioral assumptions in line with empirical evidence characterize the model: firms make price-quantity decisions according to a simple heuristic rule and...

The time profile of inflation in China resembles the one experienced in major industrial countries. Given the uncertainty surrounding the sources of economic shocks, this paper compares results from three sets of alternative identification conditions, namely the standard Blanchard-Quah approach,...