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

Author

Listed:
  • 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

Abstract

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.

Suggested Citation

  • 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, 2023. "Assessing the effects of higher immigration on the Canadian economy and inflation," Staff Analytical Notes 2023-17, Bank of Canada.
    • Handle: RePEc:bca:bocsan:23-17
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    References listed on IDEAS

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    3. Gianmarco I. P. Ottaviano & Giovanni Peri, 2021. "Rethinking The Effect Of Immigration On Wages," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 9, pages 245-290, World Scientific Publishing Co. Pte. Ltd..
    4. Joan Monras, 2020. "Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis," Journal of Political Economy, University of Chicago Press, vol. 128(8), pages 3017-3089.
    5. Ben-Gad, Michael, 2004. "The economic effects of immigration--a dynamic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 28(9), pages 1825-1845, July.
    6. George J. Borjas, 2021. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 9, pages 235-274, World Scientific Publishing Co. Pte. Ltd..
    7. Francesco Furlanetto & Orjan Robstad, 2019. "Immigration and the macroeconomy: some new empirical evidence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 34, pages 1-19, October.
    8. Christoph Albert & Joan Monras, 2022. "Immigration and Spatial Equilibrium: The Role of Expenditures in the Country of Origin," American Economic Review, American Economic Association, vol. 112(11), pages 3763-3802, November.
    9. Olivier Gervais & Marc-André Gosselin, 2014. "Analyzing and Forecasting the Canadian Economy through the LENS Model," Technical Reports 102, Bank of Canada.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Domestic demand and components; Housing; Inflation and prices; Labour markets; Potential output; Recent economic and financial developments;
    All these keywords.

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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