TORONTO, Nov. 9, 2011 /CNW/ - 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
by Finance Minister Jim Flaherty this week. In "The Roads Not Taken: Why the Bank of Canada
Stayed With Inflation Targeting," Christopher Ragan assesses the
decision, and the wrong turns and alternate routes it bypassed.
Several other routes were available, says Professor Ragan, the David
Dodge Chair in Monetary Policy at the C.D. Howe Institute. 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, concludes Professor Ragan, the renewal of the status quo
keeps in place a coherent monetary policy regime that has served
For the report go to: http://www.cdhowe.org/pdf/ebrief_125.pdf
SOURCE C.D. Howe Institute
For further information:
Professor Christopher Ragan, Associate Professor of Economics, McGill University; and the David Dodge Chair in Monetary Policy at the C.D. Howe Institute.
Phone: 416-865-1904; email: email@example.com.