The author provides a non-technical explanation of the role played by the exchange rate in Canada's inflation-targeting monetary policy. He reviews the motivation for inflation targeting and describes the monetary transmission mechanism. Though the exchange rate is an integral component of the...

Fixing measurement errors in the Consumer Price Index is a small idea that offers big payoffs to Canadians and the government. In this paper, the author says if the upcoming federal budget devoted the resources needed to improve Statistics Canada’s measurement of the Consumer Price Index,...

Sticking with the status quo was only one option under debate among monetary experts in the lead-up to renewal of the Bank of Canada’s inflation-targeting mandate, which was announced this week. Several other routes were available. Two of them – namely, targeting nominal GDP or targeting...

A confluence of factors promises to put pressure on the new Bank of Canada governor to direct monetary policy at fixing Canada’s so-called “overvalued” currency, according to a report released today by the C.D. Howe Institute. But in “The Seductive Myth of Canada’s “Overvalued”...

In this paper, the author uses the term structure of nominal interest rates to construct estimates of agents' expectations of inflation over several medium-term forecast horizons. The Expectations Hypothesis is imposed together with the assumption that expected future real interest rates are...

This paper reviews the existing theoretical and empirical literature addressing the benefits of low inflation. The ultimate goal is to arrive at a set of benefits in which a monetary authority can have genuine confidence. I argue that the current state of economic research—both empirical and...

In this paper, the author uses the term structure of nominal interest rates to construct estimates of agents' expectations of inflation over several medium-term forecast horizons. The Expectations Hypothesis is imposed together with the assumption that expected future real interest rates are...