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
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
May 20, 2003 Updating the Bank of Canada Commodity Price Index Bank of Canada Review - Spring 2003 Todd Hirsch The Bank of Canada Commodity Price Index (BCPI) summarizes the price movements of 23 commodities produced in Canada. Information provided by the BCPI is used in analyzing movements in GDP, industrial producer prices, inflation, and the exchange rate. Effective 15 May 2003, a number of changes will be reflected in the BCPI. To ensure that the index accurately reflects the natural resource sectors of the economy, a number of new components and pricing sources have been incorporated into the BCPI. Weights in the new index will be chained to 1 January 1991 and 1 January 2000 to better reflect contemporary values. Content Type(s): Publications, Bank of Canada Review articles
May 13, 2003 Policies to Sustain Growth Domestically and Internationally Remarks David Dodge Foreign Bankers' Association in the Netherlands Amsterdam, The Netherlands I have been looking forward to coming to Amsterdam since Governor Wellink extended the invitation last year. I must say that when you consider what has been happening in the world economy, it is certainly an interesting time to be a Canadian at international meetings such as the BIS meeting I attended yesterday. Content Type(s): Press, Speeches and appearances, Remarks
Un modèle « PAC » d'analyse et de prévision des dépenses des ménages américains Staff Working Paper 2003-13 Marc-André Gosselin, René Lalonde Traditional structural models cannot distinguish whether changes in activity are a function of altered expectations today or lagged responses to past plans. Polynomial-adjustment-cost (PAC) models remove this ambiguity by explicitly separating observed dynamic behaviour into movements that have been induced by changes in expectations, and responses to expectations, that have been delayed because of adjustment costs. Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Econometric and statistical methods, Economic models JEL Code(s): C, C3, C32, E, E2, E21, E3, E32
May 1, 2003 Changes to the Bank of Canada Commodity Price Index (BCPI) Effective 15 May 2003 the following changes will be made to the Bank of Canada Commodity Price Index (BCPI). Content Type(s): Press, Announcements
April 30, 2003 Opening Statement before the Senate Banking, Trade and Commerce Committee Opening statement David Dodge Senate Banking, Trade and Commerce Committee The last time I testified before this committee was in the spring of 2002, because we were unable to arrange our regular meeting last fall. You will recall that following the 11 September 2001 terrorist attacks in the United States, we quickly and aggressively cut our policy interest rate to shore up confidence and support domestic demand. By last spring, evidence had already started to build that demand was growing faster than the economy's production capacity. Content Type(s): Press, Speeches and appearances, Opening statements
April 29, 2003 Bank of Canada announces Deputy Governor appointments Media Relations Ottawa, Ontario The Board of Directors of the Bank of Canada today announced the appointment of David Longworth and Mark Carney as Deputy Governors of the Bank. Content Type(s): Press, Press releases
April 29, 2003 Opening Statement before the House of Commons Finance Committee Opening statement David Dodge House of Commons Finance Committee Last week, we released our spring Monetary Policy Report, in which we discuss economic and financial trends in the context of Canada's inflation-control strategy. I last testified before this committee in October, following the release of our autumn Monetary Policy Report. Content Type(s): Press, Speeches and appearances, Opening statements
April 23, 2003 Release of the Monetary Policy Report Opening statement David Dodge Since our October 2002 Monetary Policy Report, both core and total CPI inflation have been well above the 2 per cent inflation target. In this environment, inflation expectations have edged up. Content Type(s): Press, Speeches and appearances, Opening statements