Michael Boutros

Michael Boutros

Senior Economist

Bank of Canada

Welcome to my website. I’m a Senior Economist at the Bank of Canada as part of the Model Development and Research Division in the Financial Stability Department. My research focuses on macroeconomics and household finance, with an emphasis on business cycles. I have a PhD in Economics from Duke University.

All views on this website are my own.

Curriculum Vitae
[email protected]


  • Fiscal and Monetary Policy
  • Household Finance
  • Bounded Rationality


  • PhD in Economics, 2016–2021

    Duke University

  • MA in Economics, 2019

    Duke University

  • BSc in Financial Economics, 2015

    University of Toronto

Working Papers

Borrow Now, Pay Even Later: A Quantitative Analysis of Student Debt Payment Plans October 2022
Michael Boutros, Nuno Clara, Francisco Gomes

In the U.S. student debt currently represents the second largest component of consumer debt, just after mortgage loans. Repayment of those loans reduces disposable income early in their life cycle when marginal utility is particularly high, and limits households' ability to build a buffer stock of wealth to insure against background risks. In this paper we study alternative student debt contracts, which offer a 10-year deferral period. During this period individuals either make interest payments only (“Principal Payment Deferral”, PPD) or make no payments at all (“Full Payment Deferral”, FPD) with the missed interest payments added to the value of the debt outstanding. We first calibrate an equilibrium with the current contracts, and then solve for counterfactual equilibria with the PPD or FPD contracts. We find that both alternatives generate economically large welfare gains, which are robust to different assumptions about the behavior of the lenders and borrower preferences. We decompose the gains into the percentages resulting from loan repricing and from the deferral of debt repayments.

Windfall Income Shocks with Finite Planning Horizons October 2022. Bank of Canada Staff Working Paper 2022-40.
Michael Boutros

How do households respond to unanticipated income shocks? I build and estimate a quantitative model of bounded rationality in which reoptimization is costly. Households respond to windfall income shocks by choosing a finite planning horizon over which to reoptimize. The optimal horizon is increasing in income, wealth, and the magnitude of the income shock. In the estimated model, the distribution of consumption responses is consistent with two motivating facts: highly liquid households have large consumption responses out of income shocks that cannot be driven by borrowing constraints, and larger income shocks induce smaller consumption responses.

The Persistence of Miscalibration November 2020. R&R at The Review of Financial Studies. Latest Draft: September 2022.
Michael Boutros, Zahi Ben-David, John Graham, Campbell Harvey, John Payne

Using 14,800 forecasts of one-year S&P 500 returns made by Chief Financial Officers over a 12-year period, we track the individual executives who provide multiple forecasts to study how their beliefs evolve dynamically. While CFOs' return forecasts are systematically unbiased, their confidence intervals are far too narrow, implying significant miscalibration. We find that when return realizations fall outside of ex-ante confidence intervals, CFOs' subsequent confidence intervals widen considerably. These results are consistent with a model of Bayesian learning which suggests that the evolution of beliefs should be impacted by return realizations. However, the magnitude of the updating is dampened by the strong conviction in beliefs inherent in the initial miscalibration and, as a result, miscalibration persists.

Evaluating the Impact of Economic Impact Payments December 2020.
Michael Boutros

As part of the CARES Act, the IRS distributed $300 billion in Economic Impact Payments (EIPs) directly to US households. In the Census Bureau’s Household Pulse Survey (HPS), almost 75% of households receiving an EIP reported mostly spending it. Conditioning on labor status, 63% of employed households reported mostly spending their EIPs, compared to 84% of unemployed households. Both types of households reported spending largely on consumption goods, but unemployed households tended to pay regular bills while employed households paid down debt or increased savings. The evidence suggests that in designing an untargeted stimulus program and trading off potential efficacy for timeliness, Economic Impact Payments were overall very effective in supporting consumer spending.

Household Finances and Fiscal Stimulus in 2008 June 2019.
Michael Boutros

Using detailed household-level data from the Survey of Income and Program Participation, the ratio of credit card debt to income is found to be the most important balance sheet item in determining household usage of stimulus funds in 2008, adding to existing evidence that borrowing constraints are functions of debt-to-income ratios. Borrowing constrained households, often predicted to be the group with the largest propensity to consume out of stimulus funds, were the most likely to use stimulus payments to repay debt instead of increase consumption. This behavior is consistent with the fact that household credit supply was tightening at the same time that stimulus payments were being distributed, forcing households, especially those near their borrowing constraints, to deleverage.

The Information Effect of Monetary Policy December 2018.
Michael Boutros

A large empirical literature documents that central bank monetary policy changes signal information about future economic fundamentals to the private sector. The canonical Gali (2008) model is modified to analyze this mechanism and understand the information effect of monetary policy. We assume the central bank observes a private signal of future economic fundamentals and uses the filtered information in its Taylor rule. As a result, the nominal interest rate serves an additional function as a noisy signal of future economic fundamentals and there is an information effect of monetary policy. We find that a contractionary monetary policy induces an expansionary information effect, but for reasonable calibrations, the net effect is contractionary.

Works in Progress

Evaluating Hard Paternalism: Evidence from Tightening Credit Card Minimum Payments
The Prevalence and Relevance of Credit Card Borrowing


Monetary Policy Implementation in a Negative Rate Environment Journal of Money, Credit & Banking, 52 (2-3), March-April 2020, p. 441-470.
Michael Boutros, Jonathan Witmer

To analyze monetary policy implementation in a negative rate environment, we add the option to exchange central bank reserves for cash to the standard workhorse model of monetary policy implementation (Poole 1968). Importantly, we show that monetary policy can be constrained when the target overnight rate is below the yield on cash. At this point, the overnight rate equals the yield on cash instead of the target rate. Modifications to the implementation framework, such as a reserve requirement that varies with cash withdrawals, can help restore the implementation of monetary policy such that the overnight rate equals the target rate.

Formerly Bank of Canada Staff Working Paper 2017-25.