Inflation and prices

• Does Micro Evidence Support the Wage Phillips Curve in Canada?

  Staff Working Paper 2002-4 Jean Farès

  The existing macroeconometric evidence lends support to the wage Phillips curve by showing a negative relation between the rate of change in wages and the unemployment rate, conditional on lagged price inflation. Most theoretical models of wage setting, however, generate a "wage curve," described by a negative relation between the level of the real wage and unemployment.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices JEL Code(s): J, J3, J31

• New Phillips Curve with Alternative Marginal Cost Measures for Canada, the United States, and the Euro Area

  Staff Working Paper 2001-25 Edith Gagnon, Hashmat Khan

  Recent research on the new Phillips curve (NPC) (e.g., Galí, Gertler, and López-Salido 2001a) gives marginal cost an important role in capturing pressures on inflation. In this paper we assess the case for using alternative measures of marginal cost to improve the empirical fit of the NPC.

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

• Evaluating Factor Models: An Application to Forecasting Inflation in Canada

  Staff Working Paper 2001-18 Marc-André Gosselin, Greg Tkacz

  This paper evaluates the forecasting performance of factor models for Canadian inflation. This type of model was introduced and examined by Stock and Watson (1999a), who have shown that it is quite promising for forecasting U.S. inflation.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Inflation and prices JEL Code(s): C, C3, C32, E, E3, E37
• May 1, 2001

  Renewal of the Inflation-Control Target (May 2001)

  Commentary relating to the 2001 target renewal.

  Content Type(s): Background materials Topic(s): Inflation and prices, Monetary policy

• On the Nature and the Stability of the Canadian Phillips Curve

  Staff Working Paper 2001-4 Maral Kichian

  This paper empirically determines why, during the 1990s, inflation in Canada was consistently more stable than predicted by the fixed-coefficients Phillips curve. A time-varying-coefficient model, where all the parameters adjust simultaneously, shows that the behaviour of expectations was probably a major contributing factor.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Econometric and statistical methods, Inflation and prices JEL Code(s): E, E3, E37

• 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

• 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

• Uncovering Inflation Expectations and Risk Premiums From Internationally Integrated Financial Markets

  Staff Working Paper 1999-6 Ben Fung, Scott Mitnick, Eli Remolona

  Theory and empirical evidence suggest that the term structure of interest rates reflects risk premiums as well as market expectations about future inflation and real interest rates. We propose an approach to extracting such premiums and expectations by exploiting both the comovements among interest rates across the yield curve and between two countries, Canada and […]

  Content Type(s): Staff research, Staff working papers Topic(s): Financial markets, Inflation and prices, Interest rates, International topics JEL Code(s): E, E4, E43, G, G1, G12, G15

• A Non-Paradoxical Interpretation of the Gibson Paradox

  Staff Working Paper 1998-22 Serge Coulombe

  In this study, we show how, to yield the real cost of borrowing, the price level can be combined with the nominal interest rate in a monetary regime where the level of prices is trend stationary. We show that the price level then conveys intertemporal information in a way similar to nominal interest rates. We […]

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Inflation targets, Inflation: costs and benefits, Interest rates