Canada investigates inflation, wages and growth
A new working paper published by the Bank of Canada looks at the relationship between steady-state costs of inflation in a general equilibrium model, output growth and staggered nominal price and wage contracts.
The research finds that trend inflation affects the economy when combined with nominal contracts and real output growth, and that steady-state output and welfare losses are quantitatively important even for low values of trend inflation.
To read the working paper in full, click here
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