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Nevertheless, inflation has lately been lower than central banks have intended, while economic growth has been slower than governments would like. And so a new wave of analysis has attempted to draw a connection between the two. Maybe growth is slow because inflation is low. Maybe the ticket to faster growth is a little more inflation. With the Bank of Canada’s current inflation target of two per cent (plus or minus one percentage point) up for renegotiation later this year, some are calling for it to be raised to four or five per cent — or even abandoned altogether.

I say “new wave” with a roll of the eyes, because we have been here before. People thought a little more inflation was just the thing to spur growth in the 1960s and 1970s. After all, there did seem to be a relationship between the two: you could plot it on a graph, called the Phillips Curve after the engineer who first noticed it. But it turned out that, indeed, correlation was not causation. Repeated doses of higher inflation did not result in faster growth or lower unemployment, or not beyond the very short term. All you were left with in the end was higher inflation: not the “little more” first proposed, but a lot more.

Nevertheless, here we are again, memories of the Great Inflation — and the painful, decade-long withdrawal from it that followed — having faded, and a little more inflation is again being touted as the cure for the economy’s ills. For some, it is enough that growth, at two to three per cent annually (real, i.e., after inflation), is slower than the four per cent they think appropriate. Others are more concerned with what will happen in the next recession.