What I find encouraging is that, despite the decline in dynamism, the sectoral adjustment required as a result of the fall in oil prices happened within the anticipated time frame. This episode shows that the Canadian economy is still flexible enough to absorb a major shock. That said, significant challenges remain, as our productivity is still well below that observed south of the border.
8  become rational. In other words, Japan has lost the anchor for inflation expectations and has been stuck in a deflationary equilibrium.6 The Bank, through its bold monetary easing policy, now aims at shifting the economy from being stuck in a deflationary equilibrium to entering an inflationary equilibrium in which inflation expectations are anchored at around 2 percent.