Finance committee  Thank you, Chair. By the way, that report was penned by one of my former colleagues at the Bank of Canada, Paul Masson, so I'm familiar with the work. However, it's only one side of the balance sheet that I carry in my head. Given the circumstances we found ourselves in, as I discussed in my opening remarks, that of preserving our price-stability target and getting the Canadian economy through the crisis, this was the tool that we had available, the tool of very, very low interest rates.

Finance committee  Certainly. Thank you. I'd say the challenge is more the unknown, if anything. If you've never gone on a plane to India to sell some stuff, it can be quite a challenge. What companies have discovered is that what the big emerging markets, like India, Brazil, and China, look for is to see you at the chamber of commerce luncheon every couple of weeks and to get to know you.

Finance committee  Perhaps it is a powerful image. For me it is a way of explaining the difference between our current situation and a previous cycle such as the one we find in the textbooks. It is very different. As economists, we use our textbook models every day. I would say that this is a kind of post-war reconstruction.

Finance committee  I mentioned in my remarks that, in 2009, the Bank of Canada indicated that there was a drop in production, in potential. We saw that with companies in the automobile and forestry sectors. There was about a 50% drop in capacity in forestry. If we get demand because of construction starts in the United States, we will see it open up.

Finance committee  Thank you. Thank you for your other comments. Yes, most of what we've talked about this morning has been about the economic cycle, what the crisis did to us, and what the recovery's looked like so far and what we hope it will look like as it further progresses. On the other side of this is a global imperative that we modernize the global financial architecture.

Finance committee  Thank you for the question. I ask myself the same question. Basically, I do not really know if we have to nurture the process or simply be patient. I do not know. As I mentioned, there is one major variable. That is the matter of confidence, and it cannot be measured. You can try, but you will not get a reliable answer.

Finance committee  Of course, Mr. Chair. I'm afraid I don't know what new research has been done on that. I would say that as a central bank we really only have a modest influence on this, which is to lay a good playing field with price stability, which gives us the best chance of having things operate, markets operate, as they should.

Finance committee  Thank you. I appreciate that question. This business of measuring inflation is actually, as you've hinted, much harder than it looks. Probably every one of us has our own personal inflation experience. The reason that's different from person to person is that our spending patterns differ quite a lot by age group or by region, or what have you.

Finance committee  Thank you. That is a great point. The preamble is exactly right. The world economy and the financial system were clearly on the brink and we're very fortunate that there was a such a well-coordinated—dare I say orchestrated—response that everyone participated in, because the downside could have been much bigger.

Finance committee  Thank you for your question. Well, I think I was careful not to make any predictions, and I think for that very reason. Of course, when we get to July 17, when we issue our monetary policy report, we will put our best numbers forward, as we did in the past MPR, which of course I was not part of.

Finance committee  Thank you. This is a question that has always been of interest to economists in general. Of course, from a central bank's point of view almost anything like that is of interest. However, it's of interest from the point of view of understanding how the economy is behaving better than we would know without understanding that.

Finance committee  Thank you. It's a pleasure to be here. Thanks as well for the opportunity to elaborate. I think this is a very important part of the story. I referred to it as a post-war reconstruction to capture the notion I have in mind, that the trauma that we've been through was not like a typical cycle in our economics textbooks at all.

Finance committee  Well, our monetary policy is designed to give the most predictable and price-stable environment in which to operate, so our key ingredient is to provide that as a playing field in which companies can make these decisions. Secondly, there's the financial stability that goes with that: the strength and resilience of the financial sector, of the financial institutions.

Finance committee  Thank you for the question. In that context, it is clear that Canadian companies are going to face a major challenge. The fact that the dollar is a little high increases the size of that challenge. In terms of productivity, we can see that there are some excellent examples when we talk to business representatives individually.

Finance committee  Thank you for the question. The most important factor—and really the only one that the Bank of Canada can provide—is an environment that keeps prices stable. By that I mean a predictable environment, with minimal uncertainty, so that businesses can plan ahead. However, as I have already mentioned, the issue of productivity is very complex and varies from business to business.