【正文】 ailable information on a number of variables to determine what policy actions are appropriate to achieve the inflation target. 29 169。 2023 Pearson Education Canada Inc. Increased Output Fluctuations It has been argued that ?targeting may lead to tight policy when ? ?* and thus may lead to larger Y fluctuations. But ?targeting does not require a sole focus on ?. The decision of central banks to choose ? targets above zero reflects the concern that zero ? may have negative effects on the economy. For example, deflation is fearful (because it may promote financial instability) and targeting ? 0 makes period of deflation less likely. This is why, ?* = 2%. Moreover, ?targeting does not ignore traditional stabilization goals. The Bank of Canada and all ?targeting central banks continue to express their concern about fluctuations in Y and u. Also, they have been willing to minimize Y declines by gradually lowering mediumterm ? targets toward the longrun goal. – 30 169。 2023 Pearson Education Canada Inc. Low Economic Growth It has also been argued that ?targeting may lead to low growth in Y. Although ? reduction has been associated with belownormal Y during the disinflationary phases, once low ? has been achieved, Y and employment return to levels as high as they were before. Hence, once low ? is achieved, ?targeting is not harmful to the economy, but promotes real economic growth. 31 169。 2023 Pearson Education Canada Inc. The Taylor Rule How the target ior is chosen? Overnight rate = inflation + equilibrium real overnight rate + 1/2 (inflation gap) + 1/2 (output gap) The presence of both an inflation gap and an output gap in the Taylor rule indicates that the Bank cares not only about keeping ? low but also about minimizing business cycle fluctuations of y around its potential. This is consistent with many statements of Bank officials that controlling ? and stabilizing y are important concerns of the Bank. 32 169。 2023 Pearson Education Canada Inc. An Example of the Taylor Rule Suppose that the equilibrium real overnight rate is 2%, that ?* = 2% and ? = 3%, leading to a positive inflation gap of ? ?* = 1% (= 3% 2%). Also assume that real GDP is 1% above its potential, resulting in a positive output gap of 1%. Then the Taylor rule suggests that the overnight rate should be set at ior = 3% + 2% + 189。 (1% inflation gap) +1/2 (1% output gap) = 6%. 33 169。 2023 Pearson Education Canada Inc. Taylor Rule, NAIRU and the Phillips Curve An alternative interpretation of the presence of the output gap in the Taylor rule is that the output gap is an indicator of future ?, as stipulated in Phillips curve theory. This theory indicates that changes in ? are influenced by the state of the economy relative to its productive capacity, measured by potential GDP which is a function of the natural rate of unemployment. A related concept is the NAIRU, the nonaccelerating inflation rate of unemployment (the u at which ?? = 0). When u NAIRU, with GDP potential GDP, ? will ? When u NAIRU, with GDP potential GDP, ? will ? Prior to 1995, NAIRU was thought to be 8%, but the ? in u in the late 1990s, with no ? in ? has rendered Phillips curve theory highly controversial. 34 169。 2023 Pearson Education Canada Inc. Taylor Rule and Overnight Rate 35 169。 2023 Pearson Education Canada Inc. 謝謝觀看 /歡迎下載 BY FAITH I MEAN A VISION OF GOOD ONE CHERISHES AND THE ENTHUSIASM THAT PUSHES ONE TO SEEK ITS FULFILLMENT REGARDLESS OF OBSTACLES. BY FAITH I BY FAITH