Marleau Signature Lecture by Martin Eichenbaum, Charles Moskos Professor of Economics at Northwestern University

Should Canadians worry about the level of government debt?  Yes. But the problem isn’t Canada’s debt.  The problem, as Pierre Elliot Trudeau so famously put it, is that "Living next to the U.S. is in some ways like sleeping with an elephant. No matter how friendly and even-tempered the beast is, if I can call it that, one is affected by every twitch and grunt." The tail risk facing Canadians is the unsustainable fiscal behavior of the elephant to our south. What, if anything, can we do to protect ourselves from that risk? At a minimum, the government needs to substantially increase the duration of its debt and rethink financial regulation that assumes U.S. government debt instruments, such as Treasury Bills, are risk-free. 

Martin Eichenbaum is a Canadian economist and the Charles Moskos Professor of Economics at Northwestern University, where he also co-directs the Center for International Economics and Development. A leading scholar in macroeconomics, his research explores business cycles, monetary policy, international economics, and financial crises. He has published widely on the transmission of monetary policy, the dynamics of exchange rates, and the role of expectations in shaping economic outcomes. During the COVID-19 pandemic, his work provided important insights into the interplay between public health measures and economic activity. Professor Eichenbaum is a Fellow of the Econometric Society, a Research Associate at the National Bureau of Economic Research, and has served on the editorial boards of several top journals. In addition to his academic work, he sits on the Board of Directors of the Bank of Montreal (BMO). Eichenbaum is widely recognized for bridging rigorous economic modeling with real-world policy challenges.