The governor’s challenge | Very special advisors at the Bank of Canada

Approved! The recommendation of six students from the University of Sherbrooke on the key rate was retained by the Bank of Canada following a competition in which 26 Canadian universities participated.

Jasmin Racine, one of the six members of the team that won the Governor’s Challenge final held on February 3 in Ottawa, is happy with the result, but especially with the “real” experience, which however had no impact on monetary policy.

“It’s the biggest economic competition in Canada and it’s a lot of work,” he said in an interview with The Press.

Jonathan Simoneau, Louis-Charles Loyer, Samuel Boulanger, Alexandre Desbiens, Alexandre Gendron-Benevides and Jasmin Racine, all undergraduate economics students at the University of Sherbrooke, volunteered to participate in this competition.


Bank of Canada Governor Tiff Macklem with the winners of the 2024 Governor’s Challenge. Missing from the photo is Alexandre Gendron-Benevides.

The team, supported by Professor David Dupuis, worked for five months to develop a decision on interest rates exactly as the Bank of Canada does eight times a year.

They had to assess the global economic context, the state of the Canadian economy and the evolution of inflation, before formulating their recommendation on the key rate: should it be increased, reduced or maintained at the level current ?

Participants used the same data and models that the Board of Governors of the Bank of Canada uses to develop monetary policy. The risk analysis associated with the decision was theirs. “The economy is an aggregate of different types of information, many of which are subject to interpretation, which means that several conclusions are possible from the same data,” explains Jasmin Racine.

Of the 26 participating universities, five finalists were chosen last November to present their recommendation in Ottawa.

“An incredible school”

The students took turns justifying their recommendation to a panel of monetary policy specialists, who then submitted them to a period of questions. It happened in the very room where the deliberations of the board of governors of the central bank are held.

“That’s what’s magical,” says the coach of the Sherbrooke team, himself a former member of the Bank of Canada.

It’s an exercise in an authentic environment, an incredible school.

David Dupuis, professor at the University of Sherbrooke

The central bank also benefits from it: a variety of analyzes which enrich its thinking, and perhaps also future candidates to recruit.

The winning team was able to appreciate the complexity of monetary policy. Between the moment she was chosen among the five finalists, in November, and the presentation of her recommendation on the key rate, in February, the analysis had to be readjusted in the light of new data, says Jasmin Racine. “In November, we had an upward bias (in the key rate), which we then reduced,” he explains.

In addition to its recommendation, which was to maintain the key rate at 5%, the Sherbrooke team and the other teams had to answer a surprise question which was the following: “The American Federal Reserve announces a surprise reduction of 50 points in basis of its key rate. What is the impact of this decision on the Canadian economy and on monetary policy? » Their answer obviously satisfied the judges.

This is the second time that a team from the University of Sherbrooke has been crowned champion of the Governor’s Challenge, which was in its ninth year.

Members of the winning team received their trophies from Governor Tiff Macklem.

Last year’s winner, the University of Alberta, Carleton University, the University of Victoria and the University of Ottawa were the other finalists.


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