Inflation: costs and benefits

• Inflation, Output, and Welfare in the Laboratory

  Staff Working Paper 2023-11 Janet Hua Jiang, Daniela Puzzello, Cathy Zhang

  We investigate the effect of inflation on output and welfare in the laboratory. Consistent with monetary theory, we find that inflation acts as a tax on monetary exchange and reduces output and welfare.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Inflation: costs and benefits, Monetary policy JEL Code(s): C, C9, C92, D, D8, D83, E, E4, E40

• Understanding Post-COVID Inflation Dynamics

  Staff Working Paper 2022-50 Martin Harding, Jesper Lindé, Mathias Trabandt

  We propose a macroeconomic model with a nonlinear Phillips curve that has a flat slope when inflationary pressures are subdued and steepens when inflationary pressures are elevated. Our model can generate more sizable inflation surges due to cost-push and demand shocks than a standard linearized model when inflation is high.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Central bank research, Coronavirus disease (COVID-19), Economic models, Inflation and prices, Inflation: costs and benefits, Monetary policy, Monetary policy implementation JEL Code(s): E, E3, E30, E31, E32, E37, E4, E44, E5, E52
• October 6, 2022

  What’s happening to inflation and why it matters

  Remarks Tiff Macklem Halifax Chamber of Commerce Halifax, Nova Scotia

  Governor Tiff Macklem discusses how inflation has evolved in recent months and explains what the Bank is watching as it takes action to return inflation to target.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Central bank research, Coronavirus disease (COVID-19), Domestic demand and components, Expectations, Inflation and prices, Inflation: costs and benefits, Interest rates, Labour markets, Monetary policy, Monetary policy and uncertainty, Price stability, Recent economic and financial developments, Service sector
• October 6, 2022

  Restoring price stability for all Canadians

  Speech summary Tiff Macklem Halifax Chamber of Commerce Halifax, Nova Scotia

  Governor Tiff Macklem explains how inflation in Canada reflects more and more what’s happening with domestic demand and what the Bank is watching as it works to bring inflation back to the 2% target.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Central bank research, Coronavirus disease (COVID-19), Domestic demand and components, Expectations, Inflation and prices, Inflation: costs and benefits, Interest rates, Labour markets, Monetary policy, Monetary policy and uncertainty, Price stability, Recent economic and financial developments, Service sector
• May 12, 2022

  The perfect storm

  Remarks Toni Gravelle Association des économistes québécois Montréal, Quebec

  Deputy Governor Toni Gravelle discusses the commodity price shock and its implications for the Canadian economy and monetary policy.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Coronavirus disease (COVID-19), Domestic demand and components, Exchange rates, Expectations, Inflation and prices, Inflation: costs and benefits, Interest rates, International topics, Labour markets, Monetary policy, Monetary policy and uncertainty, Monetary policy communications, Recent economic and financial developments
• May 12, 2022

  How commodity prices affect our economy

  Speech summary Toni Gravelle Association des économistes québécois Montréal, Quebec

  Deputy Governor Toni Gravelle talks about the spike in commodity prices over the past two years, the impact on inflation and how the Bank of Canada is responding.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Coronavirus disease (COVID-19), Domestic demand and components, Exchange rates, Expectations, Inflation and prices, Inflation: costs and benefits, Interest rates, International topics, Labour markets, Monetary policy, Monetary policy and uncertainty, Monetary policy communications, Recent economic and financial developments
• August 13, 2020

  Understanding inflation

  Inflation is a persistent rise in the average level of prices over time.

  Content Type(s): Explainers Topic(s): Inflation and prices, Inflation: costs and benefits
• March 6, 2020

  Under the microscope

  

  James (Jim) C. MacGee, Rhys R. Mendes

  Evaluating our approach to monetary policy

  Content Type(s): Publications, The Economy, Plain and Simple Topic(s): Credibility, Inflation targets, Inflation: costs and benefits, Interest rates, Monetary policy framework, Price stability
• February 21, 2019

  Price check: Inflation in Canada

  

  Sharon Kozicki, Jill Vardy, Laurence Savoie-Chabot

  Why prices change, and what it means for the economy.

  Content Type(s): Publications, The Economy, Plain and Simple Topic(s): Business fluctuations and cycles, Credibility, Expectations, Inflation and prices, Inflation targets, Inflation: costs and benefits, Monetary policy framework, Monetary policy transmission, Price stability

• The Welfare Cost of Inflation Revisited: The Role of Financial Innovation and Household Heterogeneity

  Staff Working Paper 2018-40 Shutao Cao, Césaire Meh, José-Víctor Ríos-Rull, Yaz Terajima

  We document that, across households, the money consumption ratio increases with age and decreases with consumption, and that there has been a large increase in the money consumption ratio during the recent era of very low interest rates. We construct an overlapping generations (OLG) model of money holdings for transaction purposes subject to age (older households use more money), cohort (younger generations are exposed to better transaction technology), and time effects (nominal interest rates affect money holdings).

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation: costs and benefits JEL Code(s): E, E2, E21, E4, E41