E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
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Reconciling the Differences in Aggregate U.S. Wage Series
Average hourly real wage series from the Labor Productivity and Costs (LPC) program and the Current Employment Statistics (CES) program have evolved very differently over the past decades. -
Extending the Labour Market Indicator to the Canadian Provinces
Calculating the labour market indicator (LMI) at the provincial level provides useful insights into Canada’s regional economies and reveals differing trends in the state of underlying labour market conditions across provinces. Conclusions based on the Canadian LMI do not necessarily translate to the provinces. In most cases, the correlations between the provincial LMIs and the underlying labour market variables have the expected sign. -
The Complex Adjustment of the Canadian Economy to Lower Commodity Prices
In this analytical note, we provide a comprehensive assessment of the complex structural adjustment facing the Canadian economy following the commodity price decline since mid-2014. We quantify separately the impacts coming from the commodity sector restructuring and the broader effect of significantly lower terms of trade. -
Exchange Rate Fluctuations and Labour Market Adjustments in Canadian Manufacturing Industries
We estimate the link between exchange rate fluctuations and the labour input of Canadian manufacturing industries. The analysis is based on a dynamic model of labour demand, and the econometric strategy employs a panel two-step approach for cointegrating regressions. -
Credit Conditions and Consumption, House Prices and Debt: What Makes Canada Different?
There is widespread agreement that, in the United States, higher house prices raise consumption via collateral or possibly wealth effects. The presence of similar channels in Canada would have important implications for monetary policy transmission. -
The Carrot and the Stick: The Business Cycle Implications of Incentive Pay in the Labor Search Model
This paper considers a real business cycle model with labor search frictions where two types of incentive pay are explicitly introduced following the insights from the micro literature on performance pay (e.g. Lazear, 1986). -
Heterogeneity in the Dynamic Effects of Uncertainty on Investment
How does aggregate profit uncertainty influence investment activity at the firm level? We propose a parsimonious adaptation of a factor-autoregressive conditional heteroscedasticity model to exploit information in a subindustry sales panel for an efficient and tractable estimation of aggregate volatility. -
On the Welfare Cost of Rare Housing Disasters
This paper examines the welfare cost of rare housing disasters characterized by large drops in house prices. I construct an overlapping generations general equilibrium model with recursive preferences and housing disaster shocks. -
Productive Misallocation and International Transmission of Credit Shocks
We develop an asymmetric, two-country equilibrium business cycle model to study the role of international trade in transmitting and propagating the real effects of global financial shocks. Our model predicts that a recession in a large economy considerably alters a recession in its smaller trade partner, with distinct investment dynamics driving the transmission.