one - half of all import growth, and accounting for about two - thirds of global growth. this is an increasingly uneasy emergence. growth strategies reliant on exports and excess national savings are unsustainable in the long term. in the near term, for many emerging economies, the limits to non - inflationary growth are approaching and the challenges of shadowing u. s. monetary policy are increasing. see c. reinhart and v. reinhart, “ after the fall, ” macroeconomic challenges : the decade ahead, federal reserve bank of kansas city 2010 economic policy symposium. available at : http : / / www. kansascityfed. org / publicat / sympos / 2010 / reinhart - paper. pdf. with currency tensions rising, some fear a repeat of the competitive devaluations of the great depression. however, the current situation is actually more perverse. in the 1930s, countries left the gold standard in order to ease monetary policy, and the system became more flexible. today, the process is working in reverse. the international monetary system is sliding towards a massive dollar block. over a dozen countries are now accumulating reserves at double digit annual rates, and countries representing over 40 per cent of the u. s. - dollar trade weight are now managing their currencies. this death grip on the u. s. dollar is reducing the prospects for rebalancing global demand. as the bank of canada has argued elsewhere, the potential costs are huge – to $ 7 trillion in lost global output by 2015. 2 ultimately, excessive reserve accumulation will prove futile. structural changes in the global economy will yield important adjustments in real exchange rates. if nominal exchange rates do not change, the adjustment will come through inflation in emerging economies and disinflation in major advanced economies. this more wrenching adjustment has already begun, raising the risk of debt deflation and deficient global demand. at a minimum, this dynamic reinforces the low - interest - rate strategies of major advanced economies and may necessitate further rounds of quantitative easing. so what does this mean for countries caught in the middle, like canada? i will review three aspects : the effect of the second round of quantitative easing ( qe2 ) ; the implications for canadian monetary policy ; and the potential financial stability implications of “ low for long ” interest rates. qe2 and implications for canada last month, the federal reserve launched a new program to buy us $ 600 billion in

remarks by paul beaudry deputy governor university of waterloo faculty of arts distinguished lecture in economics september 20, 2022 waterloo, on macroeconomics of the 2020s : what we ’ ve learned, and what ’ s to come introduction good afternoon, and thank you for inviting me to present this year ’ s distinguished lecture in economics. i ’ m honoured to be the ninth lecturer to take this stage. i would especially like to thank professor francisco gonzales for thinking of me for today ’ s talk. francisco and i have known each other for almost 20 years and have discussed many economic issues during that time. i hope that some of the concepts i will address today — especially spillovers and the value of coordination — will resonate with him, and with students who have had the pleasure of taking his classes. i ’ m very happy to be here in person after more than two years of virtual and hybrid events. covid - 19 has certainly disrupted many aspects of our lives — our physical and mental well - being, and our ability to study and work. unfortunately, some of us even lost loved ones to this deadly virus. it goes without saying that the pandemic has also had unprecedented effects on the domestic and global economies. never before had the entire world effectively battened down the hatches so quickly and all at once. and never before had we experienced the roller coaster of re - openings and closures that has taken place since march 2020. now we ’ re also dealing with supply chain disruptions, war in ukraine and inflation that ’ s higher than we ’ ve seen in decades. when covid - 19 first hit, the bank of canada — and many other central banks — took a series of actions. some were new and innovative in response to the situation before us. others stemmed from the playbooks we used during other crises. this is a key approach to policy - making : we draw from past experiences to figure out what actions will best support the economy, keep inflation on target and protect the well - being of households and businesses. i would like to thank thomas carter and nicholas sander for their help in preparing this speech. not for publication before september 20, 2022 3 : 30 pm eastern time - 2looking back now, i believe we got a lot of things right when trying to manage the economic fallout from the pandemic. but in other areas, we could have done better. so today, with the benefit of hindsight, i want to talk about