Yaz Terajima is the Lead Research Director of Heterogeneity Laboratory, an inter-departmental research group focusing on the interactions between heterogeneity across the economy and various policies. His primary research interests include macroeconomic implications of household and firm finances, banking and monetary policy. Specific topics include distributive effects of inflation across households, small business financial constraints and bankruptcy, and bank leverage dynamics. He holds a Ph.D. from the University of Pennsylvania.
Staff Analytical Notes
In light of the financial crisis and its aftermath, several economists have argued that inflation-targeting central banks should reconsider the level of their inflation targets. While the appropriate level for the inflation target remains an open question, it’s important to note that any transition to a new target would entail certain costs.
Staff Discussion Papers
The authors document leverage, capital and liquidity ratios of banks in Canada. These ratios are important indicators of different types of risk with respect to a bank’s balance‐sheet management. Particular attention is given to the observations by different types of banks, including small banks that historically received less attention.
The authors use microdata from the 1999 and 2005 Surveys of Financial Security to identify changes in household debt, and discuss their potential implications for monetary policy and financial stability. They document an increase in the debt-income ratio, which rose from 0.75 to 0.95, on average.
Staff Working Papers
We document that, across households, the money consumption ratio increases with age and decreases with consumption, and that there has been a large increase in the money consumption ratio during the recent era of very low interest rates. We construct an overlapping generations (OLG) model of money holdings for transaction purposes subject to age (older households use more money), cohort (younger generations are exposed to better transaction technology), and time effects (nominal interest rates affect money holdings).
This paper analyzes the implications of the global financial cycle for conventional and unconventional monetary policies and macroprudential policy in small, open economies such as Canada. The paper starts by summarizing recent work on financial cycles and their growing correlation across borders.
This paper studies how banks simultaneously manage the two sides of their balance sheet and its implications for bank risk taking and real economic activity. First, we analyze how changes in funding affect the supply of bank loans.
Some evidence points to the procyclicality of leverage among financial institutions leading to aggregate volatility. This procyclicality occurs when financial institutions finance their assets with non-equity funding (i.e., debt financed asset expansions). Wholesale funding is an important source of market-based funding that allows some institutions to quickly adjust their leverage.
We study a model with repeated moral hazard where financial contracts are not fully indexed to inflation because nominal prices are observed with delay as in Jovanovic & Ueda (1997).
This paper studies the capital accumulation and welfare implications of reducing capital income taxation in a general equilibrium economy with uninsurable investment risks.
This paper examines the relationship between firm size and productivity. In contrast to previous studies, this paper offers evidence of the relationship not only from manufacturing firms, but from non-manufacturing firms as well.
Previous surveys of Canadian and U.S. business owners suggest that access to financing in Canada may be more problematic than in the United States. Using the 2003 Survey of Small Business Financing in the United States and the 2004 Survey on Financing of Small and Medium Enterprises in Canada, this paper examines whether this perception can be better quantified.
Since the work of Doepke and Schneider (2006a) and Meh and Terajima (2008), we know that inflation causes major redistribution of wealth – between households and the government, between nationals and foreigners, and between households within the same country.
There is currently a policy debate on potential refinements to monetary policy regimes in countries with low and stable inflation such as the U.S. and Canada. For example, in Canada, a systematic review of the current inflation targeting framework is underway.
- "Leverage, Balance-Sheet Size and Wholesale Funding,"
(with Evren Damar and Césaire Meh), Journal of Financial Intermediation, 22(4), 639-662 (2013).
- "Inflation, Nominal Portfolios, and Wealth Redistribution in Canada,"
(with Césaire A. Meh), Canadian Journal of Economics 44(4), 1369-1402 (2011).
- "Aggregate and Welfare Effects of Redistribution of Wealth Under Inflation and Price-Level Targeting,"
(with Césaire A. Meh and José-Víctor Ríos-Rull), Journal of Monetary Economics 57(6), 637-652 (2010).
- "Uninsurable Investment Risks and Capital Income Taxation,"
(with Césaire A. Meh). Annals of Finance 5(3), 521-541 (2009).