November 2023 – Economics and Policy

This QED Spotlight article by Brock Mutic (JDI Research Associate) presents research by QED Professor Beverly Lapham and PhD Candidate Daniel Teeter.

It is widely agreed upon by economists that intra-national trade frictions—barriers to seamless trade between regions within a country—can impact a country’s economic performance. In the Canadian context, as each province and territory has its own regulatory environment and particular trade rules, provincial borders—in addition to being geographic—are also frictional and affect the flow of goods and services within the country. Understanding the size of inter-provincial trade frictions in reality, and their effect on the flow of trade in Canada, is an important question for understanding their costs to the Canadian economy. Queen’s Economics Department Professor Beverly Lapham recently teamed up with QED Ph.D. candidate Daniel Teeter to study this important issue in a recent QED Working Paper, where the team used a state-of-the-art gravity analysis to examine the size and importance of inter-provincial trade frictions in Canada between 1997 and 2019. Their research ultimately produced insightful and policy-relevant results.

QED Research Spotlight by JDI Research Associate Brock Mutic summarizes recent research by QED Professors Allen Head and Huw Lloyd-Ellis in collaboration with former PhD student Derek Stacey

Deciding whether to buy or rent a home is one of the largest financial decisions many people make. Across cities in the United States, however, this decision is not made equally, as the affordability of homeownership varies; in different cities, it is relatively more or less affordable to buy a home, compared with renting. Although economists hypothesize these differences are driven by local economic conditions, understanding which local factors are at play is no easy task: the effects in question lay submerged in the depths of the economic ocean, driven by the rough currents of the dynamic and complex housing market, and are not easily visible from the surface. Wading through the tide, and pulling the relevant effects up from below, is a task requiring a very precise net, and a very steady hand.

Recognizing that the determinants of home affordability are relevant for millions of people however, as everyone needs a home, Queen’s Economics Department researchers Dr. Allen Head and Dr. Huw Lloyd-Ellis, in collaboration with Dr. Derek Stacey of the University of Waterloo, were undeterred by the waves. Setting their boat on the water, they engaged in research to study the question, in a paper recently published in International Economic Review. The team built a ‘frictional assignment’ model of the housing market to study the factors affecting inter-city home affordability, calibrated it, and tested it against observational data. Ultimately, they produced insightful results, with relevance for housing policy.

Economics and Policy

The John Deutsch Institute for the Study of Economic Policy @ Queen's University

Month: November 2023

True North Strong (But Free?): Frictions to Inter-Provincial Trade in Canada

Why Housing Markets and Home Affordability Vary Across Cities