E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment

• Perceived versus Calibrated Income Risks in Heterogeneous-Agent Consumption Models

  Staff Working Paper 2023-59 Tao Wang

  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.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Monetary policy, Monetary policy and uncertainty JEL Code(s): D, D1, D14, E, E2, E21, E7, E71, G, G5, G51

• Assessing the effects of higher immigration on the Canadian economy and inflation

  Staff Analytical Note 2023-17 Julien Champagne, Erik Ens, Xing Guo, Olena Kostyshyna, Alexander Lam, Corinne Luu, Sarah Miller, Patrick Sabourin, Joshua Slive, Temel Taskin, Jaime Trujillo, Shu Lin Wee

  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.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Domestic demand and components, Housing, Inflation and prices, Labour markets, Potential output, Recent economic and financial developments JEL Code(s): A, A1, A10, E, E2, E20, E3, E31, J, J1, J11, J15

• The Heterogeneous Impacts of Job Displacement: Evidence from Canadian Job Separation Records

  Staff Working Paper 2023-55 Serdar Birinci, Youngmin Park, Kurt See

  When estimating earnings losses upon job separation, existing strategies focus on separations in mass layoffs to distinguish involuntary separations from voluntary separations. We revisit the measurement of the sources and consequences of job displacement using Canadian job separation records.

  Content Type(s): Staff research, Staff working papers Topic(s): Labour markets, Potential output, Productivity JEL Code(s): E, E2, E24, E3, E32, J, J3, J31, J6, J63, J65

• Borrow Now, Pay Even Later: A Quantitative Analysis of Student Debt Payment Plans

  Staff Working Paper 2023-54 Michael Boutros, Nuno Clara, Francisco Gomes

  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.

  Content Type(s): Staff research, Staff working papers Topic(s): Asset pricing, Economic models, Financial markets, Labour markets, Market structure and pricing JEL Code(s): E, E2, G, G5, H, H3

• Labor Market Shocks and Monetary Policy

  Staff Working Paper 2023-52 Serdar Birinci, Fatih Karahan, Yusuf Mercan, Kurt See

  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.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Inflation and prices, Labour markets, Monetary policy JEL Code(s): E, E1, E12, E2, E24, E5, E52, J, J3, J31, J6, J62, J64

• The Macroeconomic Effects of Debt Relief Policies During Recessions

  Staff Working Paper 2023-48 Soyoung Lee

  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.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Credit and credit aggregates, Debt management, Housing JEL Code(s): E, E2, E21, E3, E32, E6

• Labour Supply and Firm Size

  Staff Working Paper 2023-47 Lin Shao, Faisal Sohail, Emircan Yurdagul

  This paper documents a systematic pattern of how wages, hours and their relationship vary across firms of different sizes. Using a model with heterogeneous firms and workers, we show how the interplay between wages, hours and firm size affect worker sorting and inequality.

  Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, Labour markets JEL Code(s): E, E2, E24, J, J2, J3, J31

• Digitalization: Productivity

  Staff Discussion Paper 2023-17 Jeffrey Mollins, Temel Taskin

  We examine the relationship between digitalization and productivity, the factors that influence this relationship, and how digitalization’s effect on productivity could change firm behaviour.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Digitalization, Productivity JEL Code(s): E, E2, L, L1, L11, O, O4, O47, O5, O51

• Markups and inflation during the COVID-19 pandemic

  Staff Analytical Note 2023-8 Olga Bilyk, Timothy Grieder, Mikael Khan

  We find that prices and costs for consumer-oriented firms moved roughly one-for-one during the COVID-19 pandemic. This means firms fully passed rising costs through to the prices they charged. However, our results are suggestive, given data limitations and the uncertainty associated with estimating markups.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Firm dynamics, Inflation and prices JEL Code(s): D, D2, D4, E, E2, E3, L, L1

• Time Use and Macroeconomic Uncertainty

  Staff Working Paper 2023-29 Matteo Cacciatore, Stefano Gnocchi, Daniela Hauser

  We estimate the effects of economic uncertainty on time use and discuss its macroeconomic implications. We develop a model to demonstrate that substitution between market and non-market work provides an additional insurance margin to households, weakening precautionary savings and labour supply and lowering aggregate demand, ultimately amplifying the contractionary effects of uncertainty.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Coronavirus disease (COVID-19), Domestic demand and components, Monetary policy and uncertainty JEL Code(s): E, E2, E24, E3, E32, E5, E52, J, J2, J22