The authors analyze the extent to which inflation-targeting frameworks should incorporate flexibility in order to … the Bank's current inflation-targeting framework, and conclude that maintaining low and stable consumer price inflation is … inflation by leaning against an asset-price bubble (even though it may mean that inflation deviates longer than usual from its …

, 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 … inflation obtained when this approach is applied to Canada arise mainly from distortions in the timing of consumption and saving …

Inflation distorts an economy through many channels. This paper highlights the interaction between inflation and … life cycles. Second, capital gains are taxed only when the gains are realized. Third, inflation introduces an upward bias … in the calculation of the tax base. Thus, a capital gains tax in the presence of inflation can have a large welfare …

longer-term market interest rates by taking into account the relationship between interest rates, inflation, and unemployment … rates. By using vector autoregressive models of monthly interest rates, month-over-month inflation, and unemployment rates … lowering Canadian interest rates relative to what their historical relationship with inflation and unemployment rates would …

The authors investigate the implications of house-price bubbles for the optimal inflation-target horizon using a …, given the distribution of shocks and inflation persistence over the past 25 years, the optimal target horizon for Canada … inception of the inflation-targeting regime. The authors' results also suggest that it may be appropriate to take a longer view …