Inflation Targeting in Canada: Optimal Policy or Just Being There?

Peter Howitt and John Crow

Chapter 2 in Canadian Policy Debates and Case Studies in Honour of David Laidler, 2010, pp 41-79 from Palgrave Macmillan

Abstract: Abstract David Laidler has had the good sense not to have taken too seriously the notion that people are rational maximizers, always acting under rational expectations. One of the central themes of his work is that money is a device for economizing on the costs of processing information. People use it as a buffer stock that automatically absorbs unforeseen changes in income and expenses without the need for deliberation. They also use it as a unit of account, measure of value and standard of deferred payment because it is convenient to use, conventional and easily understood, even if this seems to introduce biases and inefficiencies into their decision making and even if economists can think of better measures and standards.1

Keywords: Interest Rate; Monetary Policy; Central Bank; Price Level; Rational Expectation (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-27430-3_2

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DOI: 10.1057/9780230274303_2

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