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295 result(s)

Implications of Uncertainty about Long-Run Inflation and the Price Level

Staff Working Paper 2001-16 Gerald Stuber
This paper surveys recent developments in the theoretical and empirical literature on the economic implications of uncertainty about the longer-term outlook for inflation. In particular, the linkages between inflation, long-run inflation uncertainty, and aggregate economic activity in industrial economies have become considerably better understood during the past decade.
Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation: costs and benefits JEL Code(s): E, E2, E22, E3, E31, E4, E44

Gaining Credibility for Inflation Targets

Staff Working Paper 2001-11 James Yetman
In this paper, I consider a simple model in which agents learn about the inflation target of a central bank over time by observing the policy instrument or inflation outcomes. Measuring credibility as the distance between the perceived target and the actual target, an increase in credibility is beneficial to the central bank because it brings the policy consistent with attaining the inflation target closer to that required to attain the output target.
Content Type(s): Staff research, Staff working papers Research Topic(s): Credibility, Inflation targets JEL Code(s): E, E5, E52

How Rigid Are Nominal-Wage Rates?

Staff Working Paper 2001-8 Allan Crawford
This study examines the effect of nominal-wage rigidities on wage growth in Canada using a hazard model and micro data for union contracts. The hazard model is specified in a way that allows considerable flexibility in the shape of the estimated notional wage-change distribution.
Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation targets, Labour markets JEL Code(s): E, E2, E24, E5, E52, E6, E61

Downward Nominal-Wage Rigidity: Micro Evidence from Tobit Models

Staff Working Paper 2001-7 Allan Crawford, Geoff Wright
This paper uses Tobit models and data for union contracts to examine the extent of downward nominal-wage rigidity in Canada. To be consistent with important stylized facts, the models allow the variance of the notional wage-change distribution to be time-varying and test for menu-cost effects.
Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation targets, Labour markets JEL Code(s): E, E2, E24, E5, E52, E6, E61

The Zero Bound on Nominal Interest Rates: How Important Is It?

Staff Working Paper 2001-6 David Amirault, Brian O'Reilly
This paper surveys the literature on the zero bound on the nominal interest rate. It addresses questions ranging from the conditions under which the zero bound on the nominal interest rate might occur to policy options to avoid or use to exit from such a situation. We discuss literature that examines historical and country evidence, and literature that uses models to generate evidence on this question.
Content Type(s): Staff research, Staff working papers Research Topic(s): Credibility, Inflation targets, Monetary policy transmission JEL Code(s): E, E3, E31, E5, E52, E58, E6, E61

On the Nature and the Stability of the Canadian Phillips Curve

Staff Working Paper 2001-4 Maral Kichian
This paper empirically determines why, during the 1990s, inflation in Canada was consistently more stable than predicted by the fixed-coefficients Phillips curve. A time-varying-coefficient model, where all the parameters adjust simultaneously, shows that the behaviour of expectations was probably a major contributing factor.

On Commodity-Sensitive Currencies and Inflation Targeting

Staff Working Paper 2001-3 Kevin Clinton
Two aspects of the recent monetary history of Canada, Australia, and New Zealand stand out: the sensitivity of their dollars to prices of resource-based commodities, and inflation targeting. This paper explores various aspects of these phenomena.
November 13, 2000

Seminar Summary: Price Stability and the Long-Run Target for Monetary Policy

On 8 and 9 June 2000, the Bank held a seminar to examine some key issues affecting the upcoming decision on Canada's inflation-control target for the period after 2001. The main issues covered at the seminar were the extent of downward nominal-wage rigidity and its implications for employment as well as the relative merits of price-level targeting versus inflation targeting. Another critical question that was discussed was how to balance the evidence on all the relevant issues in order to develop an overall view on the appropriate long-run target. The author gives a brief overview of the seminar followed by detailed summaries of individual papers.
Content Type(s): Publications, Bank of Canada Review articles Research Topic(s): Inflation targets

Inflation and the Tax System in Canada: An Exploratory Partial-Equilibrium Analysis

Staff Working Paper 2000-18 Brian O'Reilly, Mylène Levac
This paper reports on an exploratory application to Canadian data of an approach pioneered by Martin Feldstein (1997, 1999). Feldstein finds that even at low inflation rates there are costs arising from the distortions introduced by the interaction of inflation with the taxation of income from capital (capital gains, dividends, and interest) in a less-than-perfectly-indexed tax system.
Content Type(s): Staff research, Staff working papers Research Topic(s): Inflation: costs and benefits JEL Code(s): E, E5, E6
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