Research interests: Macroeconomics, Economic Development & Growth, Business Cycles, Labor & Demographic Economics
Publications:
"Open economy neoclassical growth models and the role of life expectancy" with Stephen Kosempel, The B.E. Journal of Macroeconomics, Vol. 23 (2): 1057-1092, 2023
"Population aging and economic growth: A semiparametric panel data analysis", Economics Bulletin, Vol. 43 (1): 342-354, 2023
Working Papers & Work in Progress:
Abstract: This paper examines the effects of increased life expectancy on the short-run macroeconomic stability of a typical small open economy. We develop a real-business-cycle (RBC) model of a small open economy that is consistent with the main empirical facts of economic fluctuations in open economies. Different from the previous satisfactory open-economy extensions of the baseline RBC model, given its finite lifetimes feature, our framework also helps rationalize some of the key results from recent empirical literature on the relationship between longevity and business cycles. In our model, changes in life expectancy change the planning horizon of individuals and thus affect their intertemporal choices. Consequently, the cyclical volatilities of aggregate variables are also affected. As a numerical exercise, we quantify how increased life expectancy has impacted Canadian business cycle fluctuations over the past forty years. The results indicate that the fluctuations in physical capital, human capital, and consumption all decrease as life expectancy increases. On the other hand, the fluctuation of hours worked, output, and trade balance ratio are found to increase with life expectancy. Followed from the model's feature of diminishing returns to human capital, our results also reveal that changes in life expectancy will have a greater effect—in terms of magnitude—on the volatility of the abovementioned aggregate variables the lower is the initial level of life expectancy.
"A life cycle analysis of social security: Complementarities between consumer durables and leisure" with Stephen Kosempel [Slides] (In progress)
Abstract: With its aging population, the U.S. federal government is facing significant increase in the costs of public pensions and health-care plans. In this paper, we construct a dynamic general equilibrium life cycle model with explicit residential asset choices to evaluate the macroeconomic effects and aggregate welfare implications of different social security reforms that can potentially be proposed to alleviate the increasing costs. Specifically, we consider the following policy experiments: (i) a permanent increase in social security contribution rate, (ii) a permanent decrease in pension benefits, and (iii) simultaneous eliminations of both the benefits and contributions. The model economy is populated by heterogenous households with respect to age, income, and homeownership status. Most of the existing literature assumes inelastic labor supply by households and ignore leisure altogether. We hypothesize that each dollar you spent on residential capital provides more utility if you have more leisure time to spend at your home. Our objective is to highlight the potential complementarity between residential capital and leisure in a life cycle analysis of social security.
Abstract: Based on the open-economy neoclassical growth model with human capital accumulation developed in Tserenkhuu and Kosempel (2023), this paper evaluates the effects of the COVID-19 pandemic-induced life expectancy decline on the small open economies of Canada and sub-Saharan Africa, both in the long run and along the transition. In the model, increased mortality affects aggregate human capital and thus output through two channels. First, a higher mortality rate lowers an individual’s propensity to save out of wealth and in turn lowers savings at the aggregate level. Second, it raises aggregate human capital depreciation through the generational turnover effect. The results indicate that the drops in life expectancy generate gradual but persistent adverse effects on macroeconomic performance across the two regions. The COVID-19 shock is also found to temporarily push the economy below its balanced growth path, triggering a period of catch-up growth during the transition. In the long run, output per capita is estimated to decline by 0.51% in Canada and 0.54% in sub-Saharan Africa.
Abstract: Using data from the Labor Force Survey (LFS) undertaken in each February of 2019-2021, this paper analyzes whether the first year of the COVID-19 pandemic has had differential impacts on the labor force participation and earnings of natives and immigrants in Canada. We document that, between 2020 and 2021, for both groups, employment absence, unemployment, and the fraction of people who are out of labor force all increased. However, the increase in unemployment is more pronounced for immigrants. Regarding hourly wages, during the first year of the pandemic, the average hourly wages increased for the both groups. Further, the difference-in-differences (DID) estimation results suggest that there is no evidence that hourly wages changed differently for the two groups due to the pandemic. Similarly, among immigrants, we find no evidence that COVID-19 affected hourly wages of immigrant employees who landed in Canada more than and less than 10 years ago differently.
Abstract: In this paper, using the waves 1-3—covering the period between May and June of 2020—survey data from the Canadian Mental Health Association (CMHA), we study the effect of COVID-19 on the reported mental health and well-being of Canadians. We observe that reported mental health is significantly lower among younger people, workers who lost their jobs due to the pandemic, less-educated workers, and women. We also document that pandemic-induced unemployment rate is higher for younger workers than for older workers and that the young were much more likely to be laid off during the pandemic. Lastly—based on difference-in-differences (DID) estimation method—we find no evidence that the impact of COVID-19 layoffs on the likelihood that an individual suffers from poor mental health and well-being differs across younger and older worker.
Grants:
JSPS KAKENHI Grant for Early-Career Scientists, 2025 - 2026 (2,080,000 JPY)
Joint Usage/Research Grant, ISER, University of Osaka, 2024 - 2025 (350,000 JPY)
Community Engaged Scholarship:
"Water access may be more important than electricity for sub-Saharan Africa" with Louise Grogan, The Conversation, 2018