Over the last five years, a number of authors have suggested that targeting inflation rates of, say, less than 3 per cent could lead to significant economic difficulties. In the period prior to the renewal of the inflation target, Bank staff have reviewed the literature and have undertaken new research into this issue. The Bank also held a seminar at which papers by both Bank staff and outside ...

Recent increases in pathology costs per scheme member are a concern to medical schemes and pathologists alike. To better understand the observed increasing costs, the National Pathology Group commissioned Prognosys to analyse the trends affecting these increases. We found that these increases are driven by inflation, increases in utilisation, and redistribution of the burden of cost. The identi...

In the United States, but not in Canada, nominal interest on residential housing mortgages is a deductible expense for the personal income tax. This suggests that changes in nominal interest rates could conceivably have differing impacts on real estate values in the two countries. The inflation component of nominal interest should have a negative impact on Canadian real estate, but its effect s...

iranian banks can not freely determine their interest rates in the financial market. this characteristic causes banking industry unable to perform their duties of financial intermediaries in the transmission mechanism of monetary. in these circumstances, monetary shocks will have a significant and high effect on the alternative markets (like stocks and housing). in this study, we used dynamic s...

Monetary policy affects both real variables, such as employment, unemployment and output, and nominal variables, such as nominal interest and inflation rates. For close to a decade, the principal focus of monetary policy has been on inflation. During a recession, or when one appears imminent, the state of real variables such as GDP growth has been a paramount consideration, but at other times, ...

Medium-term price stability is widely accepted as the appropriate ultimate goal for monetary policy. This reflects two ideas. The first is that high rates of inflation distort decision-making, ultimately leading to slower economic growth. The second is that monetary policy is the most effective instrument in influencing medium-term inflation outcomes. By pursuing a strategy that ensures that in...

This paper extends previous empirical research on the determinants of aggregate property crime rates in two dimensions. First, we examine the effect of inflation on property crime rates. Then, using a structural time-series approach we show that it is possible to estimate consistently the effects of exogenous macroeconomic variables on aggregate property crime rates without introducing endogeno...

We examine whether the publication of forecasts concerning the likely future conduct of monetary policy is socially desirable. Introducing a new central bank loss function that accounts for the deviations from announcements, we incorporate forecasts about future inflation and interest rates into a dynamic monetary model. We show that the announcement of future interest rates is always socially ...

McCallum’s answers his question by saying that raising this target is a “sophisticated but predominantly bad idea” and the paper gives eight reasons for this conclusion. The first is that inflation is a particularly distortionary tax. The second is that, with sticky prices, inflation can lead to inefficient changes in relative prices. The third is that, based on the analysis of Schmitt-Grohé an...