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Bank of Canada RSS Feedsen2024-03-29T13:04:33+00:00The Central Bank’s Dilemma: Look Through Supply Shocks or Control Inflation Expectations?
https://www.bankofcanada.ca/2022/09/staff-working-paper-2022-41/
When countries are hit by supply shocks, central banks often face the dilemma of either looking through such shocks or reacting to them to ensure that inflation expectations remain anchored. In this paper, we propose a tractable framework to capture this dilemma and then explore optimal policy under a range of assumptions about how expectations are formed.2022-09-20T15:30:42+00:00enThe Central Bank’s Dilemma: Look Through Supply Shocks or Control Inflation Expectations?2022-09-20Central bank researchEconomic modelsInflation and pricesMonetary policyMonetary policy and uncertaintyMonetary policy communicationsStaff Working Paper 2022-41https://www.bankofcanada.ca/wp-content/uploads/2022/09/swp2022-41.pdfStaff Working Paper 2022-41Paul BeaudryThomas J. CarterAmartya LahiriSeptember 2022EE1E12E2E24E3E31E5E52E58E6E65