2011 – David Laidler
July 28 – While the Bank of Canada expects the Canadian economy to return to full employment by the middle of 2012, its critics have stressed the need to raise interest rates to a “neutral” value by then to keep inflation stable. But defining this neutral level, normally associated with full employment, is a bit of a smoke and mirrors game, according to a report from the C.D. Howe Institute. In “Natural Hazards: Some Pitfalls on the Path to a Neutral Interest Rate,” David Laidler, a leading monetary economist, questions the theoretical concept of the “natural interest rate” that underlies the idea that there is a well-determined and stable neutral value for market rates.
For the report go to:
http://www.cdhowe.org/pdf/Backgrounder_140.pdf
