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Canadian inflation targeting

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  • Paul Beaudry
  • Francisco Ruge‐Murcia

Abstract

This paper examines the intellectual environment in Canada that led to the adoption of inflation targets starting in 1991, reviews some of the Canadian contributions to the vast literature on inflation targeting and presents evidence in support of the view that the implementation of inflation targeting in Canada has been particularly successful when compared with the experiences of other inflation‐targeting countries and the US. Le ciblage canadien de l’inflation. Ce texte examine le contexte intellectuel au Canada qui a mené à l’adoption de cibles d’inflation à partir de 1991, passe en revue les contributions canadiennes à la vaste littérature sur le ciblage de l’inflation, et présente des résultats qui montrent que la mise en œ uvre du ciblage de l’inflation au Canada a été particulièrement réussie quand on compare l’expérience du Canada à celle d’autres pays qui ont utilisé d’autres formes de ciblage de l’inflation, et aux États‐Unis.

Suggested Citation

  • Paul Beaudry & Francisco Ruge‐Murcia, 2017. "Canadian inflation targeting," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1556-1572, December.
    • Handle: RePEc:wly:canjec:v:50:y:2017:i:5:p:1556-1572
    DOI: 10.1111/caje.12307
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    1. James Yetman, 2017. "The evolution of inflation expectations in Canada and the US," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(3), pages 711-737, August.
    2. Siklos, Pierre L., 2013. "Sources of disagreement in inflation forecasts: An international empirical investigation," Journal of International Economics, Elsevier, vol. 90(1), pages 218-231.
    3. Glenn D. Otto & Graham M. Voss, 2014. "Flexible inflation forecast targeting: Evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(2), pages 398-421, May.
    4. Nessen, Marianne & Vestin, David, 2005. "Average Inflation Targeting," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(5), pages 837-863, October.
    5. Frederic S. Miskin & Klaus Schmidt-Hebbel, 2007. "Does Inflation Targeting Make a Difference?," Central Banking, Analysis, and Economic Policies Book Series, in: Frederic S. Miskin & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Monetary Policy under Inflation Targeting, edition 1, volume 11, chapter 9, pages 291-372, Central Bank of Chile.
    6. Johnson, David R., 2002. "The effect of inflation targeting on the behavior of expected inflation: evidence from an 11 country panel," Journal of Monetary Economics, Elsevier, vol. 49(8), pages 1521-1538, November.
    7. Gorodnichenko, Yuriy & Shapiro, Matthew D., 2007. "Monetary policy when potential output is uncertain: Understanding the growth gamble of the 1990s," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1132-1162, May.
    8. Federico Ravenna & Marcus Mølbak Ingholt, 2021. "The impact of inflation targeting: Testing the good luck hypothesis," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 443-470, February.
    9. Michael Ehrmann, 2015. "Targeting Inflation from Below: How Do Inflation Expectations Behave?," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 213-249, September.
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    Cited by:

    1. Ricardo D. Brito & Robison F. Kudamatsu & Vladimir K. Teles, 2021. "Inflation Targeting Mattered: a multivariate synthetic control approach," Working Papers, Department of Economics 2021_26, University of São Paulo (FEA-USP).
    2. Nasir, Muhammad Ali & Vo, Xuan Vinh, 2020. "A quarter century of inflation targeting & structural change in exchange rate pass-through: Evidence from the first three movers," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 42-61.
    3. M. Ayhan Kose & Hideaki Matsuoka & Ugo Panizza & Dana Vorisek, 2019. "Inflation Expectations: Review and Evidence," Koç University-TUSIAD Economic Research Forum Working Papers 1904, Koc University-TUSIAD Economic Research Forum.
    4. Milas, Costas & Dergiades, Theologos & Panagiotidis, Theodore & Papapanagiotou, Georgios, 2024. "An assessment of inflation targeting," The Quarterly Review of Economics and Finance, Elsevier, vol. 97(C).
    5. Thomas J Carter & Rhys Mendes & Lawrence L Schembri, 2018. "Credibility, Flexibility and Renewal: The Evolution of Inflation Targeting in Canada," RBA Annual Conference Volume (Discontinued), in: John Simon & Maxwell Sutton (ed.),Central Bank Frameworks: Evolution or Revolution?, Reserve Bank of Australia.
    6. Christina Anderl & Guglielmo Maria Caporale, 2024. "Time-varying parameters in monetary policy rules: a GMM approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 51(9), pages 148-176, January.
    7. Francisco Ruge‐Murcia, 2022. "How do central banks make decisions?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(4), pages 1643-1670, November.

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    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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