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July 28, 2011

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.


David Laidler

David Laidler has been a Scholar in Residence at the C.D. Howe Institute since 1990 and a Fellow in Residence since 1999, in addition to the Canadian Bankers Association Fellow from 2000-2003.

He received his B.Sc. Econ from the London School of Economics, his M.A. (Economics) from the University of Syracuse and his Ph.D. (Economics) from the University of Chicago.