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Inflation Targets Versus International Monetary Integration - A Canadian Perspective

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  • David Laidler

Abstract

The debate about Canadian-U.S. monetary integration is surveyed. The choice is among overall monetary orders,rather than exchange rate regimes and questions of policy credibility and political accountability are crucial. Canada’s recent economic performance under inflation targets, and arguments that the flexible exchange rate has undermined real economic performance are assessed. The most economically attractive among alternative monetary orders, the adoption by Canada of the US dollar with provision for meaningful Canadian input into policy decisions and supervision of the financial system - is not politically attainable. Intermediate arrangements are unattractive and clearly inferior to Canada’s current monetary order.

Suggested Citation

  • David Laidler, 2002. "Inflation Targets Versus International Monetary Integration - A Canadian Perspective," CESifo Working Paper Series 773, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_773
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    References listed on IDEAS

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    1. John Murray & James Powell, 2002. "Dollarization in Canada: The Buck Stops There," Technical Reports 90, Bank of Canada.
    2. Laurence M. Ball & Niamh Sheridan, 2004. "Does Inflation Targeting Matter?," NBER Chapters,in: The Inflation-Targeting Debate, pages 249-282 National Bureau of Economic Research, Inc.
    3. Jonung, Lars, 2002. "National or International Inflation Targeting? The Wicksellian Dilemma of the Euro-outs," Journal of Public Policy, Cambridge University Press, vol. 22(02), pages 183-197, September.
    4. Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
    5. Laidler, David, 1999. "The Exchange Rate Regime and Canada's Monetary Order," Staff Working Papers 99-7, Bank of Canada.
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    8. Kenneth Rogoff & Yu-chin Chen, 2002. "Commodity Currencies and Empirical Exchange Rate Puzzles," IMF Working Papers 02/27, International Monetary Fund.
    9. Fischer, Stanley, 1995. "Central-Bank Independence Revisited," American Economic Review, American Economic Association, vol. 85(2), pages 201-206, May.
    10. Thom, Rodney & Walsh, Brendan, 2002. "The effect of a currency union on trade: Lessons from the Irish experience," European Economic Review, Elsevier, vol. 46(6), pages 1111-1123, June.
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    Cited by:

    1. Marzo, Massimiliano & Strid, Ingvar & Zagaglia, Paolo, 2009. "Nonlinearity in monetary policy: A reconsideration of the opportunistic approach to disinflation," Structural Change and Economic Dynamics, Elsevier, vol. 20(4), pages 288-300, December.

    More about this item

    Keywords

    monetary policy; exchange rates; central banks; inflation.;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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