Sorry, ‘Modern Monetary Theory’ doesn’t mean we can just run the presses and print off scads more cash – National Post Op-Ed
Modern Monetary Theory (MMT), once a relatively obscure branch of macroeconomics, has recently gained star status. It is riding high in the popular press in the U.S. and has been endorsed by many in the left wing of the Democratic party as a way of financing massive spending programs such as the “Green New Deal” and “Medicare for All.” MMT holds that a country with its own currency doesn’t have to worry about accumulating government debt: it can always print money to service the interest on its debt and pay down the principal. If this seems like magical thinking, it’s probably because it is.
MMT’s basis is that fiscal policy is the key to achieving full employment, using the printing of money to finance government spending. (“…
Inflation after the Crisis: What’s the Story?
Inflation went through a puzzling path after the financial crisis of 2008-09 and the reasons why warrant a closer look, according to a C.D. Howe Institute report. In “Inflation after the Crisis: What’s the Story?” authors Jeremy Kronick and Farah Omran explore a link between the breadth of economic growth and inflation performance over the […] Bank of Canada Act doesn’t need tweaking – Globe and Mail Op-Ed
Senator Diane Bellemare has launched an inquiry into revising the Bank of Canada Act to add full employment to the bank’s mandate. Senator Bellemare’s inquiry appears to reflect a view that the bank’s current framework – expressed in periodic agreements with the Parliament of Canada – of pursuing 2-per-cent inflation is deficient, and that requiring the bank to pursue an explicit goal related to jobs would improve it.
An alternative take on the situation is that the current framework is a sensible and highly successful way for the bank to pursue its existing mandate – which is in the Bank of Canada Act and already refers, among other goals, to mitigating fluctuations in employment and promoting the economic and…
With its neutral nominal rate estimate, the Bank of Canada enters uncharted territory – Globe and Mail Op-Ed
As expected, the Bank of Canada held its overnight rate target constant at 1.75 per cent this week.
More unexpectedly, with the release of its latest Monetary Policy Report, the central bank lowered its estimate of the neutral nominal rate – the rate compatible with full-capacity output and inflation equal to the 2-per-cent target – to 2.25 per cent to 3.25 per cent, from 2.5 per cent to 3.5 per cent. This means that the constant overnight target rate is closer to the neutral rate than previously thought, providing less stimulus to the economy. As the lower end of the range gets closer to 2 per cent, meaning the real neutral rate would be zero, it is fair to ask how much lower the neutral rate can go.
From a data…
Central Banks and the Future of Money
April 9, 2019 — Central banks around the world are now giving serious consideration to the pros and cons of making central bank digital currencies available to the general public, says a new study from the C.D. Howe Institute. In “Central Banks and the Future of Money,” former Deputy Governor of the Bank of Canada John […] Jeremy M. Kronick – Are shared mortgages the fix?
From: Jeremy M. Kronick To: Toronto and Vancouver Millennials Date: March 26, 2019 Re: Are shared mortgages the fix? After nearly a decade of policies geared at cooling an overheated housing market and trying to slow growth in household debt, Ottawa made affordability the name of the game in Budget 2019. The Department of Finance introduced the […] Ambler, Kronick – The softer outlook for inflation
From: Steve Ambler and Jeremy M. Kronick To: Bank of Canada Watchers Date: March 22, 2019 Re: The softer outlook for inflation The last 365 days has highlighted the challenge of being a central banker. Last year, with inflation starting to consistently hit the 2 percent target, and the output gap indicating an economy finally getting close […] S1 E3 – Pre-Budget Edition – No Rainy Day Funds
The Federal Government hasn’t been saving for a rainy day. And that rainy day may be coming as early as 2020. The C.D. Howe Institute’s Bill Robson and Queens University economist Don Drummond discuss how to bring Canada back to a balanced budget in an environment of rising interest rates, slowing economic growth going into […]William B.P. Robson – Canada’s Exchange Rate: No Fear Of Floating
From: William B.P. Robson To: Canadian-dollar watchers Date: February 7, 2019 Re: Canada’s Exchange Rate: No Fear of Floating Bank of Canada Deputy Governor Tim Lane noted in a speech this week that it is more than 20 years since the Bank intervened in the foreign exchange market to support the Canadian dollar. His topic was “The Canadian Approach to Foreign […] Is The Money Supply Signalling A Slump?
In this edition of Graphic Intelligence, we highlight the slow growth in Canada’s money supply, namely M1+, which is one of the Bank of Canada’s measures of money supply. Measures of money supply – currency plus various types of deposits – are growing at their slowest rates since the financial crisis a decade ago. Considered a […]Robson, Kronick – Money Growth in Canada is Ominously Weak
From: William B.P. Robson and Jeremy M. Kronick To: Governing Council, Bank of Canada Date: January 09, 2019 Re: Money Growth in Canada is Ominously Weak Something weird has happened to Canada’s money supply. Growth in the measures of money the Bank of Canada highlights on its website, currency plus various types of deposits and liquid financial […]