Keynesian economics

Mabel Timlin was responsible for introducing Keynesian economics to Canada. A key area of Timlin’s research surrounded The General Theory of Employment, Interest and Money presented by John Maynard Keynes. Upon completion of her dissertation in 1940, the University of Toronto Press published her work under the title "Keynesian Economics" in 1942.^[3] Timlin approached Keynes’s General Theory within a general equilibrium framework. The long-term interest rate presented in Keynes’s model is replaced by an analysis of the overall composition of interest rates and how it fits into the system’s equilibrium.^[2]

Timlin proposed three main models in her work: a static Fundamental Model and two Supplementary Models. The Fundamental Model predicted that planned savings and investment would remain the same, however from one week to another, changes in income are attributed to the relative interest rate and the marginal propensity to consume.^[5] The two Supplementary Models are essentially reversible, where in one Model the contracts for the services of factors of production are completed on Monday and on Tuesday the sales contracts are made.^[4] The sequence is reversed in the second Supplementary Model. Timlin focused on the unstable equilibrium of a Keynesian system and highlighted the conditions in Week Two are a result of the equilibrium of Week One thus shifting its position.^[4]

Timlin concluded with five main implications of her research on the Keynesian system. First, the structure of the interest rate complex is equally or even more important as the average level of interest rates to maintaining the employment level equilibrium.^[6] Second, economic activity can be hindered by both high and low interest rate levels.^[6] Third, human psychology and its unstable nature will limit the chance of reaching a stable equilibrium; high unemployment levels and low levels of interest could persist at the same time and indefinitely.^[6] Fourth, the movement of money between active and inactive balances creates business cycles, even though the amount of money is given.^[6] Lastly, unemployment is likely to be persistent in a monetary economy.^[6] Timlin’s work had significant policy implications within Canada. She highlighted the importance of economic theory in creating policy, and deduced Keynesian economics to the Liberal Party of Canada.^[4]

Monetary policy

After her extensive work on Keynesian economics, Timlin devoted the rest of her research career to monetary and immigration policy within Canada. Her research on Canadian monetary policy surrounded the post World War II era, where she critiqued the Bank of Canada’s failure to employ Keynesian countercyclical stabilization policies during the inflation period of the Korean War.^[7] Her paper titled "Recent Developments in Canadian Monetary Policy" indicated that expansionist policies undertaken by the Bank of Canada would have been more reasonable had the effects of increasing external prices and outputs on bank deposits and reserves been delayed until the inflation had resolved itself.^[7]

Similarly, in Timlin’s paper Monetary Stabilization Policies and Keynesian Theory, she indicates that following WWII, the rate of investment should have been limited through increased yield flexibility on the securities flowing into the central banks’ portfolios.^[8]

Immigration policy

Timlin published three main papers on Canadian immigration: "Economic Theory and Immigration Policy" (published in the Canadian Journal of Economics and Political Science), "Does Canada Need More People?" (published in Oxford University Press) and "Canada's Immigration Policy, 1896-1920" (published in CJEPS). In "Economic Theory and Immigration Policy" she conveyed that economic theory can only get policymakers so far in formulating immigration policy and examining the direct effects of migration; quantitative analysis is required to identify patterns and deduce proper results.^[2] In her second paper, "Does Canada Need More People?", Timlin examines both the effects of external and internal conditions on Canada’s ability to admit immigrants.^[9] Timlin studied the short and long run absorptive capacity of Canada and argued that the extent to which the effects of a growing population will be felt will depend on Canada’s external economic relationships with the rest of the world.^[2] She concluded the paper by emphasizing the importance of all nations selecting immigration policies that improve resource allocation for the whole world; a system of free migration with large-scale international trade is essential for economic development and maximizing efficiency within economies.^[2]

Timlin’s third paper on immigration policy, Canada’s Immigration policy, 1896-1920, examined the transition to the 1910 Immigration Act with particular interest on the attitudes expressed by the Minister of the Interior, Clifford Sifton, and Sir Wilfrid Laurier.^[2] Sifton believed that only agricultural immigrants were beneficial to the economy, and subsequently disapproved of Asian immigrants who did not settle on farmlands.^[2] Timlin addressed the racial tensions associated with immigration in this paper, and claimed that the prejudices were uncalled for, transmuting a labour question into a racial question.^[2]