ECONOMY – TRU students tackle population dynamics and policy

By PETER TSIGARIS

This year, undergraduate students studying Economics at Thompson Rivers University (TRU) presented their analysis of the impacts of rapid demographic changes on inflation and economic growth at the Bank of Canada’s Governor’s Challenge, competing against numerous other Canadian universities.

I had the pleasure of supervising our intelligent and hard-working students, alongside Dr. Stephania Strantza, Dr. Laura Lamb, and last year’s participant, Ashley Thomson, as they explored these significant economic issues facing Canada.

Our team — Alexander Beck, Troy Ssebanakitta, Clinton Kaboni, and Omar Bin Hamid — provided a detailed comparison of economic recovery in Canada versus the United States post-COVID-19, using data from Statistics Canada, the Bank of Canada, and the US Federal Reserve Bank.

They highlighted how Canada’s aggressive high-interest rate policy to curb inflation has impacted the housing market and increased economic hardship. However, the high-interest rate policy eventually paid off in terms of controlling inflation, with the latest figure showing a reduction of the inflation rate to 1.6%, within the Bank of Canada’s 1-3% target range, down from a peak of 8.1% in July 2022.

A central point of their analysis was the substantial impact of recent immigration increases on key economic indicators, including housing market dynamics, economic growth, and inflation pressures. They observed that high absorption rates in the housing market have led to rising prices and increased affordability challenges.

They projected a likely demographic shift due to forthcoming changes in immigration policy, which they expect a reduction in the Canadian population by 0.2% in 2025 and 0.5% in 2026. This anticipated decline could ease some pressures in the housing market but will also present new economic challenges due to reductions in labor services and human capital.

The students recommended a 25-basis point reduction in the bank rate at the upcoming December meeting of the Bank of Canada, from the current rate of 3.75%. They argued that this would reduce hardship, support GDP growth—offsetting the anticipated population decline—while keeping inflation within the target range. Their recommendations demonstrate a sophisticated understanding of the complex interplay between monetary policy and demographic factors.

Participating in the Governor’s Challenge enabled our students to apply academic theories to practical, real-world scenarios, bridging the gap between classroom learning and economic policymaking. This experience reflects TRU’s dedication to equipping students with an education that prepares them to address contemporary issues with well-informed, innovative solutions.

Watching our students confidently present their thoroughly researched conclusions was a proud moment for all of us at TRU. These opportunities not only prepare them academically but also as future leaders ready to navigate and influence economic policies.

Figure 1: From left to right:  Troy Ssebanakitta, Alexander Beck, Omar Bin Hamid, Clinton Kaboni, and Peter Tsigaris

Dr. Peter Tsigaris is a professor in the Economics department at Thompson Rivers University.