(Edmonton) Imagine if there was a way to engineer shorter and less painful economic recessions. University of Alberta School of Business professor Randall Morck thinks there may be. And he plans to use his recent Bank of Canada Fellowship to conduct that research.
Morck was named today as one of two leading researchers receiving the bank's prestigious fellowship award, which is "designed to encourage leading-edge research and to develop expertise in Canada in a number of areas critical to the bank's mandate." The fellowship covers a period of five years for a maximum of $450,000. Morck is the first University of Alberta recipient.
Much of Morck's previous research has delved into the efficiency of financial systems like banks, financial markets and business corporations and how they maximize the use of their investors' monies. Morck says that this type of research is likely what attracted the bank's attention.
As part of his fellowship, Morck, along with colleagues in the United States and Singapore, will examine the apparent domino effect caused by central bank policies and their influence on a country's economic performance. Through a reverse-engineering of macroeconomic policy decisions, Morck and his colleagues hope to better understand how and why they have such an impact on the economy. He believes that these analyses will be beneficial to Canada's economy-and likely world economies as well.
"The idea is to break macroeconomic policy down to identify its microeconomic effects, and then build those effects back up to understand economy-level outcomes," said Morck. "Intuitively, the idea is to understand what really happens on the ground when central bankers pull their monetary policy levers.
"Ultimately, this sort of research could lead to milder and shorter recessions."
Since 2003, the Bank of Canada has awarded 12 fellowships to researchers across Canada.