Research Field(s): Business Cycles Firm Dynamics Household Finance Macroeconomics

Staff research

How Do Import Tariffs Affect Aggregate Prices? Theory and Evidence from Canada

Staff working paper 2026-36 Christian Bustamante, Xing Guo, Lu Han, Soyoung Lee, Gaelan MacKenzie, Mariel Yacolca Maguiña, Jacob Short
Using Canadian firm-level market shares and an oligopolistic model, the paper shows that a 25% counter-tariff on U.S. imports raises Canada's aggregate price index by 0.66%, far below direct cost pass-through predictions due to consumer substitution and markup adjustments.
Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E31, F, F1, F13, F14, L, L1, L11, L16 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Structural challenges, International trade, finance and competitiveness

The Production Network Amplification of Retaliatory Tariffs

Staff working paper 2026-35 Christian Bustamante, Xing Guo, Lu Han, Soyoung Lee, Gaelan MacKenzie, Mariel Yacolca Maguiña, Jacob Short
We develop a framework to quantify how tariff changes on imported goods affect sectoral and aggregate consumption prices through direct and production-network channels. Using Canada's input-output matrix and administrative firm-good import data for the universe of Canadian firms, we estimate price elasticities for tariffs on U.S.-imported goods.
Content Type(s): Staff research, Staff working papers JEL Code(s): D, D5, D57, E, E3, E31, F, F1, F13, F14 Research Theme(s): Monetary policy, Inflation dynamics and pressures, Structural challenges, International trade, finance and competitiveness

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 JEL Code(s): E, E2, E21, E3, E32, E6 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Monetary policy tools and implementation, Real economy and forecasting

Persistent Debt and Business Cycles in an Economy with Production Heterogeneity

Staff working paper 2023-17 Aubhik Khan, Soyoung Lee
We examine the role of debt in amplifying and propagating recessions. Firms’ debt adjustment makes recessions deeper but makes expansions gradual. In particular, when the aggregate business leverage is ten percentage points above average, the half-life of the recovery doubles.
Content Type(s): Staff research, Staff working papers JEL Code(s): E, E2, E23, E3, E30, E32 Research Theme(s): Financial system, Financial stability and systemic risk, Household and business credit, Monetary policy, Real economy and forecasting

Heterogeneity and Monetary Policy: A Thematic Review

Staff discussion paper 2022-2 Felipe Alves, Christian Bustamante, Xing Guo, Katya Kartashova, Soyoung Lee, Thomas Michael Pugh, Kurt See, Yaz Terajima, Alexander Ueberfeldt
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.
Content Type(s): Staff research, Staff discussion papers JEL Code(s): D, D2, D25, D3, D31, E, E2, E22, E24, E5, E50, E52 Research Theme(s): Financial system, Household and business credit, Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission

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Journal publications

"A Generalized Endogenous Grid Method for Default Risk Models"
(with Youngsoo Jang), Journal of Money, Credit and Banking (2024).