The 2021–22 Surge in Inflation
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.
James (Jim) C. MacGee
Senior Research Officer
- Ph.D., Economics, University of Minnesota (2004)
Bio
James (Jim) C. MacGee has been a Senior Research Officer at the Bank of Canada since April 2024. From January 2019 to March 2024, he served as Managing Director of Economic and Financial Research. Previously, Mr. MacGee was Associate Professor of Economics at Western University, where his research interests included consumer credit and default, the Great Depression and international trade. He was the recipient of the 2013 Bank of Canada Governor’s Award for his research on consumer bankruptcy. Mr. MacGee is also a past director of the Western Master of Financial Economics program.
Mr. MacGee obtained his Bachelor of Business Administration and master’s in economics degrees from the University of New Brunswick, and his PhD in Economics from the University of Minnesota.
Staff discussion papers
Has the Inflation Process Changed? Selective Review of Recent Research on Inflation Dynamics
From 2011 to 2019, inflation in Canada and advanced economies usually registered below inflation targets, spurring the debate on whether the inflation process has changed. This paper highlights emerging questions that will influence the conduct of monetary policy in Canada in the near term.
Staff working papers
The Distributional Origins of the Canada-US GDP and Labour Productivity Gaps
We find the top 10% of the income distribution accounts for three-quarters of the gap in GDP per adult between Canada and the United States. The large gaps in income for high-income earners help distinguish between alternative explanations of this persistent gap in GDP per adult.
Consumer Credit with Over-optimistic Borrowers
When lenders cannot directly identify behavioural and rational borrowers, they use type scoring to track the likelihood of a borrower’s type. This leads to the partial pooling of borrowers, which results in rational borrowers subsidizing borrowing costs for behavioural borrowers. This, in turn, reduces the effectiveness of regulatory policies that target mistakes by behavioural borrowers.
The Heterogeneous Effects of COVID-19 on Canadian Household Consumption, Debt and Savings
The impact of COVID-19 on Canadian households’ debt and unplanned savings varies by household income. Low-income and high-income households accrued unplanned savings, while middle-income households tended to accumulate more debt.
Price-Level Dispersion versus Inflation-Rate Dispersion: Evidence from Three Countries
Inflation can affect both the dispersion of commodity-specific price levels across locations (relative price variability, RPV) and the dispersion of inflation rates (relative inflation variability, RIV). Some menu-cost models and models of consumer search suggest that the RIV-inflation relationship could differ from the RPV-inflation relationship.
Bank publications
The Economy, Plain and Simple
March 6, 2020
Evaluating our approach to monetary policy
Inflation targeting has been successful in Canada over the past 30 years. But is it the best we can do? The Bank of Canada asks itself, and Canadians, that question every five years.
Journal publications
Refereed journals
- “The Heterogeneous Effects of COVID-19 on Canadian Household Consumption, Debt and Savings,” (with Thomas Pugh and Kurt See), Canadian Journal of Economics 55, no. S1 (2022): 54-87.
- “Future realities of climate change impacts: An integrated assessment study of Canada”, (with Akhtar, Mohammad K., Slobodan P. Simonovic, and Jacob Wibe), International Journal of Global Warming,17(1) 2019, 59-88.
- “Monetary Shocks and Sticky Wages in the U.S. Great Contraction: A Multi-sector Approach,” (with Pedro Amaral), Journal of Monetary Economics, December 2017, 112-129.
- “The Democratization of Credit and the Rise in Consumer Bankruptcies,” (with Igor Livshits and Michele Tertilt), Review of Economic Studies, October 2016, 1673-1710.
- “Distance, Language, Religion, and the Law of One Price: Evidence from Canada and Nigeria,” (with David Fielding and Chris Hajzler), Journal of Money, Credit and Banking, August 2015, 1007-1029.
- “Integrated Simulation Optimization Model of Society-Energy-Economy-Climate System”, (with Akhtar, Mohammad K., Jacob Wibe, and Slobodan P. Simonovic), Environmental Modeling & Software, November 2013, 1-21.
- “Accounting for the Rise in Consumer Bankruptcies,” (with Livshits, Igor, and Michele Tertilt), American Economic Journal: Macroeconomics, April 2010, 165-193.
- “What Broad Banks Do and Markets Don’t: Cross-Subsidization,” (with Koeppl, Thor), European Economic Review, February 2009, 222-236.
- “Vested Interests and Technology Adoption,” (with Bridgman, Ben, and Igor Livshits), Journal of Monetary Economics, April 2007, 649-666.
- “Consumer Bankruptcy: A Fresh Start,” (with Livshits, Igor, and Michele Tertilt), American Economic Review, March 2007, 402-418.
- “The Great Depression in Canada and the United States: A Neoclassical Analysis,” (with Amaral, Pedro), Review of Economic Dynamics, January 2002, 45-72. Reprinted in: Timothy J. Kehoe and Edward C. Prescott, editors, Great Depressions of the Twentieth Century. Minneapolis: Federal Reserve Bank of Minneapolis, 2007.
- “The Behaviour of Productivity Growth Rates and Composition Bias in the Labour Input,” (with Weiqui Yu), Applied Economics Letters, September, 2000, 595-598.
Other
Work in progress
- “Demographics and Sectoral Reallocations: A Search Theory with Immobile Workers”, (with Simona Cociuba), Western Department of Economics Research Report #2018-2.
- “Regulating Consumer Credit with Over-Optimistic Borrowers”, (with Florian Exler, Igor Livshits and Michele Tertilt).