E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
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Benchmarks for assessing labour market health: 2024 update
We assess the health of the Canadian labour market. We find that it has seen gradual but material easing since 2023, amid some signs of structural changes. -
How changes in the share of constrained households affect the effectiveness of monetary policy
We measure how the change in the share of constrained households in Canada following the COVID-19 recession has impacted the effectiveness of monetary policy. -
Modelling Canadian mortgage debt and payments in a semi-structural model
We show how Canadian mortgage debt dynamics can be modelled in a semi-structural macroeconomic model, such as the Bank of Canada’s LENS. The model we propose accounts for Canada’s unique mortgage debt structure. -
Perceived versus Calibrated Income Risks in Heterogeneous-Agent Consumption Models
Perceived income risks reported in a survey of consumer expectations are more heterogeneous and, on average, lower than indirectly calibrated risks based on panel data. They prove to be one explanation for why a large fraction of households hold very little liquid savings and why accumulated wealth is widely unequal across households. -
Assessing the effects of higher immigration on the Canadian economy and inflation
We assess the complex macroeconomic implications of Canada’s recent population increases. We find that newcomers significantly boost the non-inflationary, potential growth of the economy, but existing imbalances in the housing sector may be exacerbated. Greater housing supply is needed to complement the long-term economic benefits of population growth. -
Uncovering the Differences Among Displaced Workers: Evidence from Canadian Job Separation Records
We revisit the measurement of the sources and consequences of job displacement using Canadian job separation records. -
Borrow Now, Pay Even Later: A Quantitative Analysis of Student Debt Payment Plans
We investigate alternative student debt contracts that defer payments and ease the burden of student loans on US households by preserving disposable income early in borrowers’ lives. Our model shows substantial welfare gains from these contracts relative to existing plans and gains similar to the Biden administration's proposals but with a significantly lower cost. -
Labor Market Shocks and Monetary Policy
We develop a heterogeneous-agent New Keynesian model featuring a frictional labor market with on-the-job search to quantitatively study the positive and normative implications of employer-to-employer transitions for inflation. -
The Macroeconomic Effects of Debt Relief Policies During Recessions
A large-scale reduction in mortgage principal can strengthen a recovery, support house prices and lower foreclosures. The nature of the intervention shapes its impact, which rests on how resources are redistributed across households. The availability of bankruptcy on unsecured debt changes the response to large-scale mortgage relief by reducing precautionary savings.