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Alternative Scenario to the October 2017 MPR Base-Case Projection: Higher Potential Growth

Jing Yang (), Ben Tomlin () and Olivier Gervais

Staff Analytical Notes from Bank of Canada

Abstract: We construct an alternative scenario in which trend labour input and business investment are stronger than that expected in the Bank of Canada’s base-case projection in the October 2017 Monetary Policy Report. We find that while the size and timing of these effects are highly uncertain, the level of potential and real output could be almost 1 per cent higher than expected by the end of 2020. The resulting effect on the output gap and inflation is small and therefore does not affect the stance of monetary policy.

Keywords: Inflation and prices; Monetary Policy; Potential output (search for similar items in EconPapers)
JEL-codes: E E2 E22 E24 E27 E5 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:bca:bocsan:17-18