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Un examen de la crédibilité de la politique monétaire au Canada

Author

Listed:
  • Perrier, Patrick

Abstract

In this study, the author uses survey data on inflationary expectations to obtain information about the credibility of Canada's monetary policy. By comparing the differences between the forecasts made by survey participants with the targets set by the Bank of Canada for the 1992-1996 period (the period covered by the study), it was possible to determine empirically whether the targets were credible. Likewise, analyzing the forecasting errors by participants made it possible to check whether setting these targets contributed to making inflation more predictable. The empirical results stemming from the analysis of the differences between the forecasts and the targets suggest that the targets were credible for the period under consideration. Indeed, for a one-year horizon, forecasters predicted a rate of inflation that was very close to the median of the target range. Analysis of the actual forecasting errors suggest also that the setting of targets contributed to reducing forecasting errors relative to the reference index and that Canadian monetary policy became more effective after the targets were implemented.

Suggested Citation

  • Perrier, Patrick, 1998. "Un examen de la crédibilité de la politique monétaire au Canada," Staff Working Papers 98-12, Bank of Canada.
  • Handle: RePEc:bca:bocawp:98-12
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    File URL: http://www.bankofcanada.ca/wp-content/uploads/2010/05/wp98-12.pdf
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    References listed on IDEAS

    as
    1. Robert Amano & Don Coletti & Tiff Macklem, 1998. "Monetary rules when economic behaviour changes," Proceedings, Federal Reserve Bank of San Francisco, issue Mar.
    2. Guy Debelle, 1996. "The Ends of Three Small Inflations: Australia, New Zealand and Canada," Canadian Public Policy, University of Toronto Press, vol. 22(1), pages 56-78, March.
    3. Keane, Michael P & Runkle, David E, 1990. "Testing the Rationality of Price Forecasts: New Evidence from Panel Data," American Economic Review, American Economic Association, vol. 80(4), pages 714-735, September.
    4. Frederic S. Mishkin & Adam S. Posen, 1997. "Inflation targeting: lessons from four countries," Economic Policy Review, Federal Reserve Bank of New York, issue Aug, pages 9-110.
    5. Allan Drazen & Paul R. Masson, 1994. "Credibility of Policies Versus Credibility of Policymakers," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 735-754.
    6. Francisco J. Ruge-Murcia, 2000. "Uncovering financial markets' beliefs about inflation targets," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 483-512.
    7. Ben S. Bernanke & Frederic S. Mishkin, 1997. "Inflation Targeting: A New Framework for Monetary Policy?," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 97-116, Spring.
    8. Jean-François Fillion & André Léonard, 1997. "La courbe de Phillips au Canada : un examen de quelques hypothèses," Staff Working Papers 97-3, Bank of Canada.
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    Citations

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    Cited by:

    1. Francisco J. Ruge-Murcia, 2000. "Uncovering financial markets' beliefs about inflation targets," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 483-512.
    2. Pierre St-Amant & David Tessier, 2000. "Résultats empiriques multi-pays relatifs à l'impact des cibles d'inflation sur la crédibilité de la politique monétaire," Canadian Public Policy, University of Toronto Press, vol. 26(3), pages 295-310, September.

    More about this item

    Keywords

    Inflation targets;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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