{"id":339833,"date":"2010-02-19T10:21:00","date_gmt":"2010-02-19T15:21:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:398042"},"modified":"2010-02-19T10:21:00","modified_gmt":"2010-02-19T15:21:00","slug":"inflation-enemy-or-ally","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/339833","title":{"rendered":"Inflation: Enemy or ally?"},"content":{"rendered":"<p>Olivier Blanchard, the chief economist at the International Monetary Fund, and a couple of colleagues have been touting the case for boosting the targeted rate of inflation to 4% rather than the 2% that most central bankers prefer. <\/p>\n<p>Their argument is that higher inflation gives central banks more ammunition to stimulate the economy should problems occur. How\u2019s that? Higher inflation means higher nominal interest rates, which in turn means more opportunities for the central bank to cut interest rates. You can chop rates more times if you start from a high number than a low one.<\/p>\n<p>To anyone who witnessed John Crow\u2019s painful battle to wring every drop of inflation out of the Canadian economy in the early 1990s, the idea of suddenly doubling the Bank of Canada\u2019s inflation target sounds unholy and perverse. But if nothing else, Blanchard\u2019s proposal appears to signal the beginning of an intellectual shift. Maybe inflation is no longer the enemy. Maybe it\u2019s an ally.<\/p>\n<p>Stephen Gordon, a professor of economics at Laval, believes Canadian monetary policy is just fine as it stands. As he points out, Canada has never experienced the dreaded <a href=\"http:\/\/worthwhile.typepad.com\/worthwhile_canadian_initi\/2010\/02\/rethinking.html\" >zero-bound problem<\/a> in which interest rates hit rock bottom and the economy doesn\u2019t respond.<\/p>\n<p>But is that really the case? One counter-argument is that Canada has benefited over the past couple of years from the enormous amount of U.S. fiscal and monetary stimulus. Absent that, and the zero bound might have been more of a problem than it was.<\/p>\n<p><i>Freelance business journalist Ian McGugan blogs for the Financial Post.<\/i>&nbsp; <\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/network.nationalpost.com\/NP\/aggbug.aspx?PostID=398042\" width=\"1\" height=\"1\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Olivier Blanchard, the chief economist at the International Monetary Fund, and a couple of colleagues have been touting the case for boosting the targeted rate of inflation to 4% rather than the 2% that most central bankers prefer. Their argument is that higher inflation gives central banks more ammunition to stimulate the economy should problems [&hellip;]<\/p>\n","protected":false},"author":4060,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-339833","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/339833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4060"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=339833"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/339833\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=339833"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=339833"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=339833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}