Finance committee  Yes, I think it does. I think it better balances the sorts of trade-offs between real growth and inflation and it better trades off the regional disparities. I certainly agree that Australia was lucky with the Asian export connection, but I think it's also important not to overlook the problem of interest rates falling to zero.

Finance committee  Of course nominal GDP growth is the sum of inflation and real GDP growth. In most countries, including the U.S. and Canada, real GDP growth has been remarkably stable on average over long periods of time. Of course, it varies over the business cycle. So if we picked, say, a 5% nominal GDP target, we would have had about 3% real growth and about 2% inflation over a period of many decades—maybe even a century.

Finance committee  I'm still here.

Finance committee  It might not happen again.

Finance committee  I think it does. It would provide a better cushion for the manufacturing parts of Canada, Ontario and so on. I also will just briefly add that Canada was a little bit lucky by the high commodity prices in the last few years. Normally during worldwide recessions, commodities would do much worse, so I think that part of Canada's superior performance to America and Britain was based on the luck of having high commodity prices during a sluggish period for the developed world economy.

Finance committee  I have that right in front of me. It looks to me like even with inflation targeting, Canada might have been able to do a bit more, but certainly with nominal GDP targeting the Bank of Canada would have been significantly more aggressive in the last three years and unemployment would probably be somewhat lower today.

Finance committee  That's a good question. In the case of Britain, I think there's a fairly general understanding that Britain needs more stimulus right now. The economy is very weak and the problem the Bank of England has is there's a desire to provide it but it feels very uncomfortable with the fact that it would be violating the inflation mandate.

Finance committee  Yes, I can. Can you hear me?

Finance committee  Thank you for inviting me. Let me say, first, that I think inflation targeting did improve things quite a bit, especially in Canada, but I think the current recession shows there are some flaws in inflation targeting and that we can do better. I have to admit, though, that probably right now the biggest advantages would be in the U.S. and Great Britain, but perhaps in the future in Canada as well, and even now it would benefit somewhat.

Finance committee  Thank you for inviting me.