Inflation Targeting in Canada: Myth versus Reality

We have known Philip Arestis for over two decades since we first met in the mid-to-late 1980s just at the time when his research contributions in Post-Keynesian economics had taken off to achieve significant international recognition and success, notably his early collaborative work with Alfred Eichner and Malcolm Sawyer. Over this quarter century, since the early years at the Thames Polytechnic (now the University of Greenwich), we have seen his work proliferate and achieve prominence in many areas of economic analysis. Like that of many other Post-Keynesian writers, Philip’s research has been highly versatile, albeit with a strong penchant for macroeconomic policy issues. However, unlike many Post-Keynesians of his generation, his research also shows a strong empirical bent. Indeed, because of his important applied work, he is the only Post-Keynesian, to our knowledge, from whom our own Bank of Canada has actually sought advice and invited him to Ottawa for consultation. It is, therefore, because of this strong research interest in central banking that we have chosen to delve into the issue of monetary policy both on the theoretical and empirical fronts, namely the policy of inflation targeting as implemented in Canada since February 1991.