Donald Coletti - Latest

• December 8, 2006

  Perspectives on Productivity and Potential Output Growth: A Summary of the Joint Banque de France/Bank of Canada Workshop, 24–25 April 2006

  Bank of Canada Review - Winter 2006-2007 Gilbert Cette, Donald Coletti

  A nation's productivity is the prime determinant of its real incomes and standard of living, as well as being a major determinant of its potential output. In the short run, deviations of actual output from potential output are a useful indicator of inflationary pressures. This article is a short summary of the proceedings of the workshop, which focus on productivity and potential output growth among industrialized countries. The research is organized under three main themes: estimating potential growth; productivity and growth; and institutions, policies, and growth.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): International topics, Potential output, Productivity
• June 2, 2006

  Another Look at the Inflation-Target Horizon

  Bank of Canada Review - Summer 2006 Donald Coletti, Jack Selody, Carolyn A. Wilkins

  The conduct of monetary policy within an inflation-targeting framework requires the establishment of an inflation-target horizon, which is the average time it takes inflation to return to the target. Policy-makers have an interest in communicating this horizon, since it is likely to help anchor inflation expectations. This article focuses on the determination of the appropriate policy horizon by reporting on two recent Bank of Canada studies. The evidence suggests that the current target horizon of six to eight quarters remains appropriate. It is important to note that the duration of the optimal inflation-target horizon varies widely, depending on the combination of shocks to the economy. In rare cases when the financial accelerator is triggered by a persistent shock, such as an asset-price bubble, it may be appropriate to take a longer view of the inflation-target horizon.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Inflation targets, Monetary policy framework, Monetary policy transmission
• May 21, 2003

  Conference Summary: Price Adjustment and Monetary Policy

  Bank of Canada Review - Spring 2003 Robert Amano, Donald Coletti

  The 2002 Bank of Canada Conference focused on price adjustment, a critically important issue for monetary policy. Given the acceptance throughout the 1990s and 2000s of the existence of price stickiness in goods or labour markets, or both, and of the important role that monetary policy can play in an economy, the time was right for a conference that would focus on current developments in this area of research, particularly within a Canadian context. Conference papers covering both theoretical and empirical studies explored such themes as sources of the persistence of inflation, forward-looking models of inflation, models of inflation in open economies, the macroeconomic effects of technology shocks, and models of the interaction between wages, prices, and real economic outcomes.

  Content Type(s): Publications, Bank of Canada Review articles
• August 19, 2002

  Models in Policy-Making

  Bank of Canada Review - Summer 2002 Donald Coletti, Stephen Murchison

  This article examines another strategy in the Bank's approach to dealing with an uncertain world: the use of carefully articulated models to produce economic forecasts and to examine the implications of the various risks to those forecasts. Economic models are deliberate simplifications of a complex world that allow economists to make predictions that are reasonably accurate and that can be easily understood and communicated. By using several models, based on competing paradigms, the Bank minimizes policy errors that could result from relying on one view of the world and one philosophy of model design. The authors review some of the models currently used at the Bank, as well as the role of judgment in the projection process.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Economic models

• Monetary Rules When Economic Behaviour Changes

  Staff Working Paper 1999-8 Robert Amano, Donald Coletti, Tiff Macklem

  This paper examines the implications of changes in economic behaviour for simple inflation-forecast–based monetary rules of the type currently used at two inflation-targeting central banks. Three types of changes in economic behaviour are considered, changes that are motivated by developments in monetary and fiscal policy in the 1990s: changes in monetary policy credibility, changes in […]

  Content Type(s): Staff research, Staff working papers Topic(s): Credibility, Monetary policy and uncertainty, Monetary policy framework JEL Code(s): E, E5, E52
• November 14, 1998

  Lower inflation: Benefits and costs

  Bank of Canada Review - Autumn 1998 Donald Coletti, Brian O'Reilly

  The federal government and the Bank of Canada have been committed for some time to achieving and maintaining price stability as a way to foster a rising standard of living for all Canadians. To support this objective, the inflation-control target range of 1 to 3 per cent was recently extended through to the end of 2001. By then, the government and the Bank plan to announce a long-run target for monetary policy. In this article, the authors provide an overview of the most recent empirical evidence on the benefits of lower inflation. They draw on an extensive earlier survey and on work presented at two recent conferences on price stability hosted by the Bank of Canada. They find that, when inflation and tax interactions are taken into account, there are large benefits to lowering inflation. When these benefits are compared with the transitional costs associated with lowering inflation, significant positive benefits remain. However, the authors note that the extension of the inflation-control targets to the end of 2001 allows further research to ensure an operational definition of price stability that will help Canadians achieve a high standard of living.

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

• The Bank of Canada's New Quarterly Projection Model, Part 3. The Dynamic Model: QPM

  Technical Report No. 75 Donald Coletti, Benjamin Hunt, David Rose, Robert Tetlow

  The Bank of Canada's new Quarterly Projection Model, QPM, combines the short-term dynamic properties necessary to support regular economic projections with the consistent behavioural structure necessary for policy analysis.

  Content Type(s): Staff research, Technical reports Topic(s): Economic models JEL Code(s): C, C5, C53, E, E1, E17