David Longworth - Latest

• May 22, 2003

  Inflation Targeting and Medium-Term Planning: Some Simple Rules of Thumb

  Bank of Canada Review - Spring 2003 David Longworth

  Inflation targeting, a stable macroeconomic environment, and an average growth rate for potential output that is not expected to vary much in the next several years all help households, businesses, and governments in their medium-term economic and financial planning. Several simple rules of thumb can be usefully employed in this planning. Specifically, inflation targeting has maintained most major measures of inflation quite close to the target midpoint on average over a number of years. Combined with a clear fiscal framework, this has contributed to a more stable macroeconomic environment in which output varies less around its potential level. Potential output growth is expected to average around 3 per cent over the next several years. In light of these factors and historical relationships, labour income, profits, and consumer spending will likely grow, on average, by about 5 per cent over the medium term. Real and nominal long-term interest rates should also continue to be stable, with real 30-year yields varying around 3.5 or 4.0 per cent, and nominal yields varying around 5.5 or 6.0 per cent.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Business fluctuations and cycles, Inflation targets, Inflation: costs and benefits

• Money in the Bank (of Canada)

  Technical Report No. 93 David Longworth

  With the demise of monetary targeting over the past 20 years in many major countries, the question has arisen as to whether central banks should look at money at all when formulating and conducting monetary policy.

  Content Type(s): Staff research, Technical reports Topic(s): Monetary aggregates, Monetary policy transmission JEL Code(s): E, E5, E50, E51, E52
• August 21, 2002

  Monetary Policy and Uncertainty

  Bank of Canada Review - Summer 2002 Paul Jenkins, David Longworth

  Central banks must cope with considerable uncertainty about what will happen in the economy when formulating monetary policy. This article describes the different types of uncertainty that arise and looks at examples of uncertainty that the Bank has recently encountered. It then reviews the strategies employed by the Bank to deal with this problem. The other articles in this special issue focus on three of these major strategies.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Monetary policy and uncertainty, Monetary policy framework
• May 21, 2002

  Inflation and the Macroeconomy: Changes from the 1980s to the 1990s

  Bank of Canada Review - Spring 2002 David Longworth

  Over the last 10 years, the level of inflation has been much lower than in the previous two decades. At the same time, the behaviour of inflation has changed profoundly. By surveying the data and the economic research, the author first examines changes in the variability, growth rates, and behaviour of some of the major macroeconomic variables during the 1980s and 1990s. He then looks at how these changes are linked to a shift in the approach of monetary policy over the period. Lastly, he reviews the economic benefits that these changes have had for Canada.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Business fluctuations and cycles, Credibility, Inflation targets, Inflation: costs and benefits

• The Canadian Experience with Weighted Monetary Aggregates

  Staff Working Paper 1995-10 David Longworth, Joseph Atta-Mensah

  This paper compares the empirical performance of Canadian weighted monetary aggregates (in particular, Fisher ideal aggregates) with the current summation aggregates, for their information content and forecasting performance in terms of prices, real output and nominal spending for the period 1971Q1 to 1989Q3. The properties of money-demand equations for these aggregates, particularly their temporal stability, […]

  Content Type(s): Staff research, Staff working papers Topic(s): Monetary aggregates

• International Capital Mobility and Asset Substitutability: Some Theory and Evidence on Recent Structural Changes

  Technical Report No. 44 Francesco Caramazza, Kevin Clinton, Agathe Côté, David Longworth

  This study examines different aspects of the international integration of capital markets. In particular, it attempts to determine whether the changes in controls and regulatory policies that have occurred in the past decade have been associated with a greater degree of market integration.

  Content Type(s): Staff research, Technical reports Topic(s): Balance of payments and components, Financial markets JEL Code(s): F, F2, F20, G, G1, G11, G15

• A Comparison of Alternative Monetary Policy Regimes in a Small Dynamic Open-Economy Simulation Model

  Technical Report No. 42 David Longworth, Stephen S. Poloz

  In this paper, the simulation properties of a small, dynamic, open-economy IS-LM-Aggregate Supply model are examined under a variety of alternative policy rule assumptions. These assumptions include rigid money stock, exchange rate and nominal income targets, as well as less rigid policy rules that recognize information limitations. The model that is used consists of four […]

  Content Type(s): Staff research, Technical reports Topic(s): Economic models, Monetary policy framework JEL Code(s): E, E5, E52