Christian Bustamante is a Senior Economist in the Financial Stability Department at the Bank of Canada. He is a quantitative macroeconomist with interest in monetary economics, firm dynamics and heterogeneity. His research focuses on understanding the role of financial factors in heterogeneous agent monetary economies. He received his Ph.D. in Economics from the Ohio State University.
We measure the contribution to inflation from the growth in markups of Canadian firms. The dynamics of inflation and markups suggest that changes in markups could account for less than one-tenth of inflation in 2021. Further, they suggest that peak inflation was driven primarily by changes in the costs of firms.
The theory that rich economic diversity of businesses and households both affects and is shaped by economy-wide fluctuations has strong implications for monetary policy. This review places these insights in a Canadian context.
I use a search-theoretic model of money to study how open market operations affect the conduct of monetary policy and what this means for households along the wealth distribution. In the model, households vary in the size and composition of their portfolios, which in turn implies that they may be unevenly affected by open market operations.