Supply and demand-driven inflation : decomposition and policy implications / Kira Kang, Rodrigo Sekkel, Temel Taskin, Jing Yang.: FB3-8/2026-33E-PDF
"This note decomposes Canadian inflation into supply- and demand-driven components using detailed personal consumption expenditure data. We find that both supply and demand forces contributed to the post-pandemic rise in inflation, with supply-side pressures accounting for the larger share. Demand-driven inflation is more cyclical and declines during economic downturns. We then use the decomposition in two policy applications. First, contractionary monetary policy shocks lower demand-driven inflation but have little effect on supply-driven inflation. Second, estimates of a targeted Taylor rule indicate that the Bank of Canada responds more strongly to demand-driven inflation than to supply-driven inflation. The results highlight the importance of distinguishing between the sources of inflation when evaluating inflationary pressures and monetary policy"--Abstract, page ii.
Permanent link to this Catalogue record:
publications.gc.ca/pub?id=9.965200&sl=0
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| Title | Supply and demand-driven inflation : decomposition and policy implications / Kira Kang, Rodrigo Sekkel, Temel Taskin, Jing Yang. |
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| Publication type | Monograph - View Master Record |
| Language | [English] |
| Format | Digital text |
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| Description | 1 online resource (ii, 15 pages) : charts. |
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