canada. the us economy has continued to steam ahead. there is a clear need for the pace of expansion in the united states to slow as we progress through this year and into 2001. prudent monetary management dictates that we in canada do not underestimate the upside risks for inflation, especially given the strong growth of aggregate demand in canada, the united states, and elsewhere. because of a lag of some 18 to 24 months in the effect of monetary policy on prices, the bank is always trying to anticipate inflationary pressures one to two years ahead. productivity growth is the only way to achieve long - term gains in incomes and living standards. the technological revolution that is currently sweeping the world provides canada with a golden opportunity to improve its productivity. the best contribution monetary policy can make to enhancing productivity is to provide a low - inflation environment. low and stable inflation reduces uncertainty about future price movements, lowers the incidence of boom - and - bust cycles in the economy, and helps keep interest rates down. all of this encourages investment in the equipment and software needed to take advantage of the new technology. canada ’ s inflation - control target and the bank ’ s commitment to maintaining that target, should ensure that monetary policy fosters a climate conducive to continued improvement in the performance of our economy.

roger w ferguson, jr : technology, information production, and market efficiency remarks by mr roger w ferguson, jr, vice chairman of the board of governors of the us federal reserve system, at a symposium sponsored by the federal reserve bank of kansas city, jackson hole, wyoming on 31 august 2001. * * * i am pleased to participate in this symposium on the information economy. my colleagues in kansas city deserve thanks for again having arranged a stimulating program. i will begin by discussing some issues that relate directly to the paper by d ’ avolio, gildor, and shleifer. i will then offer some broader comments on the actual or potential effects of information technology in markets for financial services. this paper fits into the large literature on the economics of imperfect information. this line of research has generated important insights concerning economic behavior and the functioning of markets, showing in particular that imperfect information can lead to outcomes that are distinctly less favorable than those under complete information. andrei shleifer ( with many co - authors ) has been a leading contributor to this field. the current paper argues that advances in information and communication technology have improved the functioning of financial markets in many ways but that this technology also has a dark side that may harm market efficiency. this concern centers on the stock market and reflects the following argument. improvements in information technology - most notably, the rapid growth of the internet have made participating in the market much easier and cheaper and, as a result, the market has drawn in many new and unsophisticated investors. these “ noise traders ” cannot differentiate between accurate and distorted information about a given company. thus, company managers see greater opportunity to boost their firm ’ s stock price by fooling investors through the release of distorted information - and have a strong incentive to do so because of the shift toward stock - based compensation and the widespread use of equity financing in the “ new economy ”. in the end, according to the paper, more information is available, but its quality has deteriorated, which reduces the benefit from information technology for market efficiency. because the incentive to produce distorted information is so strong, the authors doubt that market mechanisms alone can correct the problem. they advocate a two - pronged strategy of enhanced disclosure requirements and investor education to improve market efficiency. these recommendations are very sensible. the emphasis on disclosure has long been a cornerstone of the regulatory framework in the united states, and it lies behind recent initiatives at the sec to combat what the commission views as a variety of conflicts of interest that