Economics students stand out in Bank of Canada challenge

U of A team takes top honours in national competition by considering the impact of inflation and high interest rates on lower-income households.


Bank of Canada governor Tiff Macklem (front row, centre) with the U of A’s winning team: (back row) Aishwarya Tyagi, Vivek Gala, Max Sties, James Davison; (front row) Malik Shukayev, Selam Abraham and Kayla Stephanson (Photo courtesy of Bank of Canada)

For the second time in three years, a team of economics students from the University of Alberta has won a national student competition put on by the Bank of Canada.

The eighth annual Governor’s Challenge asked students to take on the role of advisers to the bank’s governing council and recommend whether to raise the bank’s key interest rate, lower it or leave it unchanged.

The team was made up of five students majoring in economics — James Davison, Kayla Stephanson, Vivek Gala, Aishwarya Tyagi and Selam Abraham — who competed against teams from Carleton University, Université de Sherbrooke, St. Francis Xavier University and the University of British Columbia in the final round. Associate professor Malik Shukayev and assistant lecturer Max Sties in the Department of Economics were the faculty advisers.

The U of A team’s presentation focused on how inflation and higher interest rates are putting a squeeze on the Canadian economy in general, and people in lower income brackets specifically.

“If you look at the different basket items within inflation, you see that the major contributors to inflation right now are the necessities,” says Abraham, who was responsible for tracking domestic economic trends.

“It’s food, it’s shelter, it’s transportation. And so what that means is at the same time that the whole economy is facing high inflation, lower income quintiles, because they spend a larger share of their income on the necessities, inflation is hitting them much harder.”

On top of that, Abraham adds, lower-income households tend to borrow more, which means they’re also being hit harder by high interest rates.

Given their findings, the team recommended that the Bank of Canada hold its key interest rate at 4.5 per cent.

“It’s a difficult trade-off, but one that we argued in our presentation is still important,” explains Gala, who tracked global economic trends for the team.

He explains that although high interest rates are negatively affecting low-income households, high inflation has the same impact, and unless the bank maintains high interest rates, inflation is likely to remain high.

“If we don’t control inflation now, it could really spiral out of control,” says Gala.

According to the team’s projections, if the Bank of Canada maintains high interest rates, inflation should start decreasing by the end of 2023. Of course, Gala points out, that’s assuming everything in the economy stays more or less the same until then.

This is the second time a team from the U of A has won the competition, the fifth time the university has made the finals and the seventh year it has participated.

“It’s just an experience”

Shukayev and Sties select students for the team from their fourth-year macroeconomic policy class, where students compete to participate.

The class always starts with around 25 students, but after the first week some students usually drop the class because of the intense workload, leaving only 10 to 12 to compete, according to Shukayev. Those left standing prepare reports and presentations to be given in front of the class, and then Shukayev and Sties choose the students they feel are most likely to succeed.

“We look at their presentation skills, teamwork, leadership and analytical skills,” says Shukayev.

The week before the November reading break, the instructors announce the teams.

“Now the work really begins,” jokes Sties.

The students selected for this year’s team had the fall reading break to put together their presentation for the first round, and that meant some long days and nights.

“Spending four nights in a row on campus, sleeping on tables and floors, trying to get it done through reading week last semester, it’s just an experience,” says Gala.

Both he and Abraham credit their professors for making themselves available at all hours during that week and for giving them a good idea of what to expect during the competition. They also gave credit to their teammates, who worked well together and supported each other as they raced against the clock.

After all their hard work, the students were successful in making the final round and then it was off to the Bank of Canada’s headquarters in Ottawa.

“It was overwhelmingly beautiful and just generally overwhelming,” says Abraham of the experience.

“You feel the weight or the gravity of the decisions that get made there,” adds Gala.

The judges for the final included Eric Santor, adviser at the Bank of Canada; Maureen Carroll, managing director of the Bank of Canada’s currency department; and Geneviève Verdier, division chief at the International Monetary Fund.

Though the judges don’t explain their final decision, the team did receive feedback during the competition, and generally Shukayev and Sties heard that their students were energetic, their presentation flowed logically, their charts were impressive and they were well prepared for the question period.

The team’s specific approach — looking at the impact on low-income households — also helped them stand out.

“That’s not something that other teams focused on,” says Sties.

Developing a talent pool

Seven of the U of A students who’ve participated in the Governor’s Challenge over the years have gone on to work for the Bank of Canada, and Abraham and Gala say they were very much aware that the challenge is also a recruiting event.

“There’s definitely interest amongst the whole team in working there,” says Abraham.

Shukayev says doing well in the competition definitely gets students attention, but they still need to perform well on the interview to land a job.

“The training they get as part of this competition actually helps with the interview as well, so I would say it makes them much more likely to get the good jobs, especially with the Bank of Canada.”

Even students from the economics class who don’t make the team learn applicable skills that are valuable in the job market.

“Sometimes to stand out in the modern labour market, you have to have some things that are really valued by the profession,” says Shukayev. “Among them are teamwork, communication, and the ability to analyze data and write informative reports or deliver informative presentations.”