IDEAS home Printed from https://ideas.repec.org/a/cpp/issued/v18y1992i4p413-424.html
   My bibliography  Save this article

Do Canadians Want Zero Inflation? Some Evidence from a Model with 'Sophisticated' Voters

Author

Listed:
  • Daniel J. Richards

Abstract

This paper uses a "sophisticated voter" model to infer the preferences of the Canadian public regarding macroeconomic policy and, more specifically, the optimal rate of inflation. Unlike most previous work on voter behaviour, the approach used here assumes that the public has some understanding of the limited goals that macroeconomic policy can achieve and that voters also recognize that an inflation rate other than zero may be optimal. Indeed, using public opinion data from 1957:3 through 1990:4, I estimate that the preferred inflation rate of the Canadian electorate is in the order of 7 to 8 percent. I also find that voter support for the incumbent federal party is significantly related both to that party's ability to limit fluctuations in real GDP and its ability to maintain inflation close to the preferred inflation rate.

Suggested Citation

  • Daniel J. Richards, 1992. "Do Canadians Want Zero Inflation? Some Evidence from a Model with 'Sophisticated' Voters," Canadian Public Policy, University of Toronto Press, vol. 18(4), pages 413-424, December.
    • Handle: RePEc:cpp:issued:v:18:y:1992:i:4:p:413-424
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    as
    1. Prescott, Edward C., 1986. "Theory ahead of business-cycle measurement," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 25(1), pages 11-44, January.
    2. Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
    3. Alberto Alesina, 1988. "Macroeconomics and Politics," NBER Chapters, in: NBER Macroeconomics Annual 1988, Volume 3, pages 13-62, National Bureau of Economic Research, Inc.
    4. Richards, Daniel J., 1988. "Some evidence on the inflationary bias of macroeconomic policy," Journal of Macroeconomics, Elsevier, vol. 10(3), pages 435-447.
    5. Thomas F. Cooley & Gary D. Hansen, 1991. "The welfare costs of moderate inflations," Proceedings, Federal Reserve Bank of Cleveland, pages 483-518.
    6. Garman, David M & Richards, Daniel J, 1989. "Policy Rules, Inflationary Bias, and Cyclical Stability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 409-421, November.
    7. Havrilesky, Thomas, 1988. "Monetary Policy Signaling from the Administration to the Federal Reserve," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(1), pages 83-101, February.
    8. Chappell, Henry W, Jr, 1983. "Presidential Popularity and Macroeconomic Performance: Are Voters Really So Naive?," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 385-392, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel J. Richards, 1993. "What inflation policy do American voters want, and do they get it?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 33-44.
    2. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291401, HAL.
    3. Juan Carlos Echeverry, 1996. "The rise and Perpetuation of a Moderate Inflation, Colombia 1970-1991," Borradores de Economia 050, Banco de la Republica de Colombia.
    4. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Post-Print hal-01291401, HAL.
    5. David Andolfatto & Paul Gomme, 2003. "Monetary Policy Regimes and Beliefs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(1), pages 1-30, February.
    6. Josh Ryan-Collins, 2015. "Is Monetary Financing Inflationary? A Case Study of the Canadian Economy, 1935-75," Economics Working Paper Archive wp_848, Levy Economics Institute.
    7. Fraccaroli, Nicolò & Giovannini, Alessandro & Jamet, Jean-François & Persson, Eric, 2022. "Ideology and monetary policy. The role of political parties’ stances in the European Central Bank’s parliamentary hearings," European Journal of Political Economy, Elsevier, vol. 74(C).
    8. Stephanos Papadamou & Moïse Sidiropoulos & Eleftherios Spyromitros, 2017. "Is There a Role for Central Bank Independence on Public Debt Dynamics?," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 7(1), pages 1-6.
    9. Giuseppe DIANA, 2000. "Wage Indexation, Central Bank Independence and the Cost of Disinflation," Working Papers of BETA 2000-03, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    10. Goodhart, Charles, 1989. "The Conduct of Monetary Policy," Economic Journal, Royal Economic Society, vol. 99(396), pages 293-346, June.
    11. Rodrigo Suescún M., 1995. "Growth, Welfare Costs and Aggregate Fluctuations in Economies with Monetary Taxation," Borradores de Economia 036, Banco de la Republica de Colombia.
    12. David Romer, 1993. "Openness and Inflation: Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(4), pages 869-903.
    13. Aruoba, S. Boragan & Waller, Christopher J. & Wright, Randall, 2011. "Money and capital," Journal of Monetary Economics, Elsevier, vol. 58(2), pages 98-116, March.
    14. Alberto Alesina & Gerald D. Cohen & Nouriel Roubini, 1992. "Macroeconomic Policy And Elections In Oecd Democracies," Economics and Politics, Wiley Blackwell, vol. 4(1), pages 1-30, March.
    15. Cleomar Gomes da silva & Flavio V. Vieira, 2016. "Monetary policy decision making: the role of ideology, institutions and central bank independence," Economics Bulletin, AccessEcon, vol. 36(4), pages 2051-2062.
    16. Jakob De Haan & Jan Egbert Sturm, 1992. "The Case for Central Bank Independence," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 45(182), pages 305-327.
    17. Belke, Ansgar & Potrafke, Niklas, 2012. "Does government ideology matter in monetary policy? A panel data analysis for OECD countries," Journal of International Money and Finance, Elsevier, vol. 31(5), pages 1126-1139.
    18. Crosby, Mark, 1998. "Central bank independence and output variability," Economics Letters, Elsevier, vol. 60(1), pages 67-75, July.
    19. Fischer, Carolyn & Springborn, Michael, 2011. "Emissions targets and the real business cycle: Intensity targets versus caps or taxes," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 352-366.
    20. Hayat, Zafar & Balli, Faruk & Rehman, Muhammad, 2018. "Does inflation bias stabilize real growth? Evidence from Pakistan," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1083-1103.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpp:issued:v:18:y:1992:i:4:p:413-424. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Iver Chong (email available below). General contact details of provider: https://www.utpjournals.press/loi/cpp .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.