27(2), pages 1–78. Levin, A and Williams, J (2003), “Robust Monetary Policy with Competing Reference Models,” Computing in Economics and Finance 2003 291, Society for Computational Economics. BIS central bankers’ speeches  21  Nickell and Saleheen (2015), “The impact of immigration on occupational wages: evidence from Britain”, Bank of England Staff Working Paper No. 574, December. Phillips, A (1958), “The Relationship between Unemployment and the Rate of Change of Money Wages in the United Kingdom 1861–1957”. Economica 25 (100): 283–299. Rachel, L and Smith, T (2015), “Secular drivers of the global real interest rate”, Bank of England Staff Working Paper No. 571, December. Sack (1998), “Uncertainty, leaning and gradual monetary policy”, Board of Governors of the Federal Reserve System, July. Smets, F and Wouters, R (2007), “Shocks and Frictions in US Business Cycles: A Bayesian DSGE Approach.” American Economic Review, 97(3): 586–606. Speigner, B (2014), “Long-term unemployment and convexity in the Phillips curve”, Bank of England Working Paper No. 519, December. Uhlig, H (2005), “What are the effects of monetary policy on output? Results from an agnostic identification procedure,” Journal of Monetary Economics, Elsevier, vol. 52(2), pages 381–419, March. Vlieghe, G (2016), “Debt, Demographics and the Distribution of Income: new challenges for monetary policy”, Speech at the London School of Economics, January. Weale, M (2014), “Slack and the labour market”, speech at Thames Valley Chamber of Commerce, Windsor, March. 22  BIS central bankers’ speeches
7  Simulations by Dorich, Labelle, Lepetyuk and Mendes (2015) using a model for the Canadian economy indicate that a target of 2 per cent leads to a result that is almost as good as if the target were raised to 3 or 4 per cent, given that the policy rate can be complemented by quantitative easing as well as active and credible supporting communication. BIS central bankers’ speeches  3  Major direct impact of interest rate changes makes Swedish CPI unique This direct impact of interest rate changes on inflation is quite unique to Sweden. The reason for the effect is that we include household mortgage costs in the CPI in a slightly different way than most other countries with inflation targets. More specifically, we attempt to measure households’ costs for living in an owner-occupied property, where interest expenditure is an important component.8 The CPI is calculated according to roughly the same principles in Canada, for example, but in practice the interest rate changes have a much smaller impact on the CPI there than here in Sweden.9 In Australia and New Zealand, interest rate changes also previously had a major direct impact on the CPI, but the method for calculating CPI changed in both countries at the end of the 1990s in a way that eliminated such effects.10 They now apply a method which is principally based on following price developments of new housing, a so-called net acquisition approach.