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Inflation targeting and monetary policy in Canada: What is the impact on inflation uncertainty?

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  • Miles, William
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    Abstract

    Inflation uncertainty has been demonstrated both theoretically and empirically to lower real output. This paper examines the impact of inflation targeting in Canada on inflation uncertainty, as well as persistence. Our results indicate that inflation targeting lowered inflation persistence, but actually increased uncertainty. Such an effect may be due to the failure of the previous formal target, the M1 money supply, to successfully combat inflation.

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    File URL: http://www.sciencedirect.com/science/article/B6W5T-4PPF6FK-1/2/56c6f466b1e86b5cbffab76b034daa5d
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    Bibliographic Info

    Article provided by Elsevier in its journal The North American Journal of Economics and Finance.

    Volume (Year): 19 (2008)
    Issue (Month): 2 (August)
    Pages: 235-248

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    Handle: RePEc:eee:ecofin:v:19:y:2008:i:2:p:235-248

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    Web page: http://www.elsevier.com/locate/inca/620163

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    15. Alex Cukierman, 1992. "Central Bank Strategy, Credibility, and Independence: Theory and Evidence," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262031981, December.
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    17. Guy Debelle, 1997. "Inflation Targeting in Practice," IMF Working Papers 97/35, International Monetary Fund.
    18. Honda, Yuzo, 2000. "Some tests on the effects of inflation targeting in New Zealand, Canada, and the UK," Economics Letters, Elsevier, vol. 66(1), pages 1-6, January.
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