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January 14, 2008

Business Outlook Survey - Winter 2007-08

Overall, firms remain positive about the outlook, with the results of the winter survey showing little change from those of the autumn survey. Nonetheless, firms reported more uncertainty in light of recent developments, most notably the volatility in the value of the Canadian dollar.
December 15, 2007

Introduction: Recent Research on Inflation Targeting

The inflation targeting framework that Canada introduced in 1991 has played a significant role in the exceptional economic performance that the country has experienced in recent years. Understanding the factors that have contributed to the success of the current inflation-targeting framework, and investigating the various ways in which it might be improved in the future, are an important part of the Bank of Canada's medium-term research program.
December 14, 2007

The Costs of Inflation in New Keynesian Models

Ambler describes three new channels through which inflation affects economic welfare in New Keynesian models. These channels were absent from traditional analyses and may have caused researchers to underestimate the costs associated with variable inflation, even at relatively low levels of inflation. The article concludes with a preliminary assessment of the quantitative importance of the new channels and their significance for monetary policy.
December 13, 2007

Central Bank Performance under Inflation Targeting

Gosselin examines and reports on the various factors that contribute to successful inflation targeting. Using a panel of 21 inflation-targeting countries over the period 1990Q1-2007Q2, Gosselin finds that the ability of central banks to hit their targets varies considerably. Some of these differences can be explained by exchange rate fluctuations, fiscal deficits, and differences in financial development. Others are explained by differences in the targeting framework itself and the manner in which it is implemented.
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