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Frank Kruger
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Of course, the mass media and other communication in a country will have a real impact on how people think about these things. Consider how the media handled the preamble to the Iraq War in the U.S., the treatment the Dixie Chicks received, and what happened to Valerie Plume. Could these events be considered as constraining freedom? Frances Woolley starts out with a quote from Paul Krugman, who has been writing about Very Serious People for a long time. Since these VSP get a lot of air time, in the U.S. and around the world, many people are extremely misinformed about our economic issues today. This shaping of people's opinions is constraining freedom of thought and those who fill out these surveys do not even know it. Taking a look at these surveys is certainly instructive in that it dispels the correlation between freedom and government involvement, which some VSP consider the root of all evil. Our current government certainly wants to shrink itself...
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Like this article as it puts perspective to what the Bank of Canada is trying to do. It is very true that it has done a good job of maintaining a favorable economic environment over the last two decades or so. Also, I agree that targeting core inflation is probably too narrow a mandate. What do you think of the U.S. Fed's dual mandate (inflation and unemployment)? Just one point...I do not think you can argue that targeting NGDP could allow the country to avoid recessions. After all, we saw a CPI spike in 2008 to to increased demand for resources from Asia, an entirely external influence. In addition, the recession that followed had much to do with the global financial meltdown which ultimately impacted overall aggregate demand, and interest rates just did not matter. Now, with rates at close to zero, the Bank of Canada is really left with potentially unconventional monetary measures to target a higher NGDP. Would these measures be sufficient? Or should fiscal or other policies play their role? There was an initial fiscal package in 2009-2010, but was that really enough? Somehow, I doubt it. A side note is how the Canada / U.S. exchange rate has changed the game since 2008; businesses since then have been rationalizing what Canadian labour is utilized to provide products for U.S. or other markets. I know that the bank has been considering this while setting its policies, but I just wonder how much of this impact's weight should be placed on only the bank's shoulders.
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Jan 10, 2013