diff --git a/src/lexer/token.rs b/src/lexer/token.rs
index 0e7664a8..3c50d2a5 100644
--- a/src/lexer/token.rs
+++ b/src/lexer/token.rs
@@ -92,6 +92,7 @@ pub enum Token {
     As,
     Block,
     Boxed,
+    Can,
     Do,
     Effect,
     Else,
@@ -278,6 +279,7 @@ impl Display for Token {
             Token::As => write!(f, "'as'"),
             Token::Block => write!(f, "'block'"),
             Token::Boxed => write!(f, "'boxed'"),
+            Token::Can => write!(f, "'can'"),
             Token::Do => write!(f, "'do'"),
             Token::Effect => write!(f, "'effect'"),
             Token::Else => write!(f, "'else'"),
@@ -376,6 +378,7 @@ pub fn lookup_keyword(word: &str) -> Option<Token> {
         "as" => Some(Token::As),
         "block" => Some(Token::Block),
         "boxed" => Some(Token::Boxed),
+        "can" => Some(Token::Can),
         "do" => Some(Token::Do),
         "effect" => Some(Token::Effect),
         "else" => Some(Token::Else),
diff --git a/src/parser/ast.rs b/src/parser/ast.rs
index 10c229d0..f982bdff 100644
--- a/src/parser/ast.rs
+++ b/src/parser/ast.rs
@@ -118,6 +118,7 @@ pub struct Lambda<'a> {
     pub args: Vec<Ast<'a>>,
     pub body: Box<Ast<'a>>,
     pub return_type: Option<Type<'a>>,
+    pub effects: Option<Vec<EffectName<'a>>>,
 
     pub closure_environment: ClosureEnvironment,
 
@@ -127,6 +128,8 @@ pub struct Lambda<'a> {
     pub typ: Option<types::Type>,
 }
 
+pub type EffectName<'a> = (String, Vec<Type<'a>>);
+
 // TODO: Remove. This is only used for experimenting with ante-lsp
 // which does not refer to the instantiation_mapping field at all.
 unsafe impl<'c> Send for Lambda<'c> {}
@@ -268,6 +271,7 @@ pub enum TypeDefinitionBody<'a> {
 /// type Name arg1 arg2 ... argN = definition
 #[derive(Debug, Clone)]
 pub struct TypeDefinition<'a> {
+    pub boxed: bool,
     pub name: String,
     pub args: Vec<String>,
     pub definition: TypeDefinitionBody<'a>,
@@ -593,10 +597,14 @@ impl<'a> Ast<'a> {
         })
     }
 
-    pub fn lambda(args: Vec<Ast<'a>>, return_type: Option<Type<'a>>, body: Ast<'a>, location: Location<'a>) -> Ast<'a> {
+    pub fn lambda(
+        args: Vec<Ast<'a>>, return_type: Option<Type<'a>>, effects: Option<Vec<EffectName<'a>>>, body: Ast<'a>,
+        location: Location<'a>,
+    ) -> Ast<'a> {
         assert!(!args.is_empty());
         Ast::Lambda(Lambda {
             args,
+            effects,
             body: Box::new(body),
             closure_environment: BTreeMap::new(),
             return_type,
@@ -656,9 +664,9 @@ impl<'a> Ast<'a> {
     }
 
     pub fn type_definition(
-        name: String, args: Vec<String>, definition: TypeDefinitionBody<'a>, location: Location<'a>,
+        boxed: bool, name: String, args: Vec<String>, definition: TypeDefinitionBody<'a>, location: Location<'a>,
     ) -> Ast<'a> {
-        Ast::TypeDefinition(TypeDefinition { name, args, definition, location, type_info: None, typ: None })
+        Ast::TypeDefinition(TypeDefinition { boxed, name, args, definition, location, type_info: None, typ: None })
     }
 
     pub fn type_annotation(lhs: Ast<'a>, rhs: Type<'a>, location: Location<'a>) -> Ast<'a> {
diff --git a/src/parser/desugar.rs b/src/parser/desugar.rs
index ab8d3de8..06141f09 100644
--- a/src/parser/desugar.rs
+++ b/src/parser/desugar.rs
@@ -36,7 +36,7 @@ where
     });
 
     let function_call = call_function(function, args, loc);
-    Ast::lambda(curried_args, None, function_call, loc)
+    Ast::lambda(curried_args, None, None, function_call, loc)
 }
 
 fn matches_underscore(arg: &Ast) -> bool {
@@ -85,7 +85,7 @@ fn prepend_argument_to_function<'a>(f: Ast<'a>, arg: Ast<'a>, location: Location
 pub fn desugar_loop<'a>(params_defaults: Vec<(Ast<'a>, Ast<'a>)>, body: Ast<'a>, location: Location<'a>) -> Ast<'a> {
     let (params, args) = params_defaults.into_iter().unzip();
     let recur_name = || Ast::variable(vec![], "recur".to_owned(), location);
-    let recur_def = Ast::definition(recur_name(), Ast::lambda(params, None, body, location), location);
+    let recur_def = Ast::definition(recur_name(), Ast::lambda(params, None, None, body, location), location);
     let recur_call = Ast::function_call(recur_name(), args, location);
     Ast::new_scope(Ast::sequence(vec![recur_def, recur_call], location), location)
 }
diff --git a/src/parser/mod.rs b/src/parser/mod.rs
index 0705dd0c..69050a6b 100644
--- a/src/parser/mod.rs
+++ b/src/parser/mod.rs
@@ -72,6 +72,7 @@ parser!(statement_list loc =
 fn statement<'a, 'b>(input: Input<'a, 'b>) -> AstResult<'a, 'b> {
     match input[0].0 {
         Token::ParenthesisLeft | Token::Identifier(_) => or(&[definition, assignment, expression], "statement")(input),
+        Token::Boxed => type_definition(input),
         Token::Type => or(&[type_definition, type_alias], "statement")(input),
         Token::Import => import(input),
         Token::Trait => trait_definition(input),
@@ -95,11 +96,12 @@ parser!(function_definition location -> 'b ast::Definition<'b> =
     name <- pattern_argument;
     args <- many1(pattern_argument);
     return_type <- maybe(function_return_type);
+    effects <- maybe(effect_clause);
     _ <- expect(Token::Equal);
     body !<- block_or_statement;
     ast::Definition {
         pattern: Box::new(name),
-        expr: Box::new(Ast::lambda(args, return_type, body, location)),
+        expr: Box::new(Ast::lambda(args, return_type, effects, body, location)),
         mutable: false,
         location,
         level: None,
@@ -108,6 +110,18 @@ parser!(function_definition location -> 'b ast::Definition<'b> =
     }
 );
 
+parser!(effect_clause location -> 'b Vec<(String, Vec<Type<'b>>)> =
+    _ <- expect(Token::Can);
+    effects <- many1(effect);
+    effects
+);
+
+parser!(effect location -> 'b (String, Vec<Type<'b>>) =
+    name <- typename;
+    args <- many0(basic_type);
+    (name, args)
+);
+
 parser!(varargs location -> 'b () =
     _ <- expect(Token::Range);
     _ <- expect(Token::MemberAccess);
@@ -168,12 +182,13 @@ fn parenthesized_irrefutable_pattern<'a, 'b>(input: Input<'a, 'b>) -> AstResult<
 }
 
 parser!(type_definition loc =
+    boxed <- maybe(expect(Token::Boxed));
     _ <- expect(Token::Type);
     name <- typename;
     args <- many0(identifier);
     _ <- expect(Token::Equal);
     body <- type_definition_body;
-    Ast::type_definition(name, args, body, loc)
+    Ast::type_definition(boxed.is_some(), name, args, body, loc)
 );
 
 parser!(type_alias loc =
@@ -182,7 +197,7 @@ parser!(type_alias loc =
     args <- many0(identifier);
     _ <- expect(Token::Equal);
     body <- parse_type;
-    Ast::type_definition(name, args, TypeDefinitionBody::Alias(body), loc)
+    Ast::type_definition(false, name, args, TypeDefinitionBody::Alias(body), loc)
 );
 
 fn type_definition_body<'a, 'b>(input: Input<'a, 'b>) -> ParseResult<'a, 'b, ast::TypeDefinitionBody<'b>> {
@@ -717,9 +732,10 @@ parser!(lambda loc =
     _ <- expect(Token::Fn);
     args !<- many1(pattern_argument);
     return_type <- maybe(function_return_type);
+    effects <- maybe(effect_clause);
     _ !<- expect(Token::RightArrow);
     body !<- block_or_statement;
-    Ast::lambda(args, return_type, body, loc)
+    Ast::lambda(args, return_type, effects, body, loc)
 );
 
 parser!(operator loc =