ECON 304 Lecture Notes - Wage, Dynamic Stochastic General Equilibrium, Output Gap
21 Apr 2013
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Document Summary
Monetary policy in canada and the us: part 2. In the previous lecture, we present a detailed analysis of how monetary policy is implemented in. While the objective of monetary policy in canada and in many other countries is simple, that is to target a given level of the cpi, achieving this objective is complex. In this lecture, we give an overview of some of the data that the sta and governing council use to come to a decision regarding the level at which they should set the overnight rate. In formulating monetary policy, central banks have to deal with substantial uncertainty. Uncer- tainty is often pervasive and can come from numerous sources and can take many forms. Uncertainty can be grouped under three categories: data, model and shock. The data used by economists con- tain errors and are often subject to revisions. For example, gdp in canada published by statistics.
