E31 - Price Level; Inflation; Deflation

• 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 Topic(s): Credibility, Inflation targets, Monetary policy transmission JEL Code(s): E, E3, E31, E5, E52, E58, E6, E61

• 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.

  Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Inflation targets, International topics, Monetary policy implementation JEL Code(s): E, E3, E31, E5, E52, F, F3, F31, F4, F42

• Core Inflation

  Technical Report No. 89 Seamus Hogan, Marianne Johnson, Thérèse Laflèche

  The Bank of Canada uses core CPI inflation, the year-over-year rate of change of the consumer price index excluding food, energy, and the effects of changes in indirect taxes, as the operational guide for monetary policy.

  Content Type(s): Staff research, Technical reports Topic(s): Inflation and prices JEL Code(s): E, E3, E31

• Price Stickiness, Inflation, and Output Dynamics: A Cross-Country Analysis

  Staff Working Paper 2000-12 Hashmat Khan

  The sticky-price model of aggregate fluctuations implies that countries with high trend inflation rates should exhibit less-persistent output fluctuations than countries with low trend inflation.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles JEL Code(s): E, E3, E31, E32

• Non-Parametric and Neural Network Models of Inflation Changes

  Staff Working Paper 2000-7 Greg Tkacz

  Previous studies have shown that interest rate yield spreads contain useful information about future changes in inflation. However, such studies have for the most part focused on linear models, ignoring potential non-linearities between interest rates and inflation.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Inflation and prices JEL Code(s): C, C5, C51, E, E3, E31

• Indicator Models of Core Inflation for Canada

  Staff Working Paper 1999-13 Richard Dion

  When there is uncertainty about estimates of the margin of unused capacity in the economy, examining a range of inflation indicators may help in assessing the balance of risks regarding the outlook for inflation. This paper tests a wide range of observable variables for their leading-indicator properties with respect to core inflation, including: commodity prices, […]

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices JEL Code(s): E, E3, E31, E37

• On the Believable Benefits of Low Inflation

  Staff Working Paper 1998-15 Christopher Ragan

  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 theoretical—provides little basis for believing in significant observable benefits […]

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation: costs and benefits JEL Code(s): E, E3, E31

• A Measure of Underlying Inflation in the United States

  Staff Working Paper 1997-20 Iris Claus

  A monetary authority with the primary objective of price stability has to distinguish between temporary price shocks and persistent shocks to the rate of inflation. A measure of underlying inflation, therefore, has an important role to play as a guideline for monetary policy.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, International topics JEL Code(s): E, E3, E31

• Menu Costs, Relative Prices, and Inflation: Evidence for Canada

  Staff Working Paper 1997-14 Robert Amano, Tiff Macklem

  The menu-cost models of price adjustment developed by Ball and Mankiw (1994;1995) predict that short-run movements in inflation should be positively related to the skewness and the variance of the distribution of disaggregated relative-price shocks in each period. We test these predictions on Canadian data using the distribution of changes in disaggregated producer prices to measure the skewness and standard deviation of relative-price shocks.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Monetary policy framework JEL Code(s): C, C5, C52, E, E3, E31

• A Band-Aid Solution to Inflation Targeting

  Staff Working Paper 1997-11 Robert Amano, Richard Black, Marcel Kasumovich

  This paper reviews selectively the literature on exchange rate target zones and corresponding methodologies and examines whether they can be used to analyse the inflation-control problem.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets JEL Code(s): E, E3, E31, E5, E50