The Roads Not Taken: Why the Bank of Canada Stayed With Inflation Targeting

Sticking with the status quo was only one option under debate among monetary experts in the lead-up to renewal of the Bank of Canada’s inflation-targeting mandate, which was announced this week. Several other routes were available. Two of them – namely, targeting nominal GDP or targeting full employment – were arguably non-starters. Two other approaches, however, held more promise: (i) moving to a price-level targeting regime, or (ii) sticking with inflation targeting but with a lower, say 1 percent, target. Nevertheless, the renewal of the status quo keeps in place a coherent monetary policy regime that has served Canadians well.Monetary Policy, Canada, Bank of Canada, inflation targeting

Conductor having two frequency-selective surfaces

An antenna having two frequency-selective surfaces is disclosed. The antenna includes a first frequency-selective surface (FSS) having multiple holes to form a mesh, a second FSS having a multiple holes to form a mesh, and a perfect electric conductor located between the first FSS and the second FSS.Board of Regents, University of Texas Syste

Financial Stability: The Next Frontier for Canadian Monetary Policy

The monetary policy arrangement in Canada has proven very successful. Despite many and varied economic shocks, the Bank of Canada has established the necessary conditions under which the annual rate of inflation, as measured by the rate of change of the Consumer Price Index, has remained very close to its formal 2 percent target for more than 15 years. The recent financial crisis, however, has highlighted the fact that low inflation may not be enough to ensure the stability of the financial system and the economy in general. The goal of achieving and maintaining financial stability has become, in Canada and elsewhere, the next frontier of monetary policy. What is needed is a new Canadian institutional framework to oversee macro-prudential regulation, which would take a systemic approach to safeguarding the financial system as a whole, and clearly define the role of the Bank of Canada within it. It will require the federal government, first, to recognize the importance of the issue and, second, to take the necessary time to assemble the framework with the appropriate parties involved and to assign responsibilities clearly. Doing it right will involve bringing together various policy authorities with different perspectives, specialties, and primary mandates.Monetary Policy, Bank of Canada, inflation targeting, Consumer Price Index (CPI)

Why Monetary Policy Matters: A Canadian Perspective

This article provides answers to several key questions about Canadian monetary policy. First, what is monetary policy? Second, why does the Bank of Canada focus on the control of inflation rather than other macroeconomic variables? Third, how do the Bank's actions influence the rate of inflation? And, finally, how can monetary policy deliver genuine and significant benefits to society?

Precision Targeting: The Economics – and Politics – of Improving Canada’s Inflation-Targeting Framework

The Bank of Canada’s inflation-targeting framework, since its inception in 1991, has proven itself a success. Yet further improvements in the system should be considered seriously for inclusion in a renewed monetary policy agreement, between the Bank of Canada and the federal government, and renewal is due in 2011. Some improvements would deliver genuine economic benefits to millions of Canadians over the years ahead. Lowering the target rate for consumer price inflation in particular would help secure the domestic purchasing power of our financial assets. Such a change, however, should be part of a coherent framework, which addresses financial stability goals and political imperatives.Monetary Policy, Bank of Canada, inflation targeting, Statistics Canada, CPI, Ministry of Finance, Office of the Superintendent of Financial Institutions

Fixing Canada’s CPI: A Simple and Sensible Policy Change for Minister Flaherty

Fixing measurement errors in the Consumer Price Index is a small idea that offers big payoffs to Canadians and the government. In this paper, the author says if the upcoming federal budget devoted the resources needed to improve Statistics Canada’s measurement of the Consumer Price Index, Canadians would have a truer sense of changes in the cost of living, monetary policy would be guided by a more accurate measure of inflation, and Minister Flaherty would more easily achieve the government’s commitment to balance the federal budget by 2015/16.Monetary Policy, Consumer Price Index (CPI), Statistics Canada, inflation rate

The Exchange Rate and Canadian Inflation Targeting

An essential element of the Bank of Canada's inflation-targeting framework is a floating exchange rate that is free to adjust in response to shocks that affect the Canadian and world economies. This floating rate plays an important role in the transmission mechanism for monetary policy. A practical question is how the Bank of Canada incorporates currency movements into the monetary policy decision-making process. Only after determining the cause and persistence of exchange rate change, and its likely net effect on aggregate demand, can the Bank decide on the appropriate policy response to keep inflation low, stable, and predictable. Ragan reviews the need to target inflation and the transmission mechanism for monetary policy, including the role of the exchange rate, before describing two types of exchange rate movements and their implications for monetary policy.

Discrimination in the Workplace: Evidence from a Civil War in Peru

Few events give the opportunity to observe the full range of human behavior as wars do. In the case of civil wars in ethnically-mixed societies, the distribution of violence across various segments of the population can provide evidence on the extent and nature of discrimination. As in the case of markets, identifying discrimination in the warplace is challenging. There is uncertainty on the reconstruction of events as well as the rationale behind the violence. We use a unique data set collected by the Peruvian Truth and Reconciliation Commission on war crimes during the 1980's to show that there is evidence of taste-based discrimination by agents of the state towards ethnic minorities and women. The evidence is robust to different assumptions on the logic of repression and missing data problems. Working Paper 07-3