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Stability of Central Bank Preferences, Macroeconomic Shocks, and Efficiency of the Monetary Policy. Empirical Evidence for Canada

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  • Gabriel Rodriguez

    () (Department of Economics, University of Ottawa)

Abstract

Following the approach suggested by Favero and Rovelli (2002), I estimate a three-equations system for different sub-samples for Canada. The results indicate that the preferences of the monetary authority have changed between the different regimes. In particular, the parameter associated to the implicit target of inflation has been reduced significantly. The macroeconomic conditions from the side of the aggregate demand have been more favorable than those related to the aggregate supply. The standard deviation of the monetary rule suggests that it has been conducted successfully in the last regime.

Suggested Citation

  • Gabriel Rodriguez, 2006. "Stability of Central Bank Preferences, Macroeconomic Shocks, and Efficiency of the Monetary Policy. Empirical Evidence for Canada," Working Papers 0603E, University of Ottawa, Department of Economics.
  • Handle: RePEc:ott:wpaper:0603e
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    File URL: http://sciencessociales.uottawa.ca/economics/sites/socialsciences.uottawa.ca.economics/files/0603E.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Rodolfo Cermeño & F. Alejandro Villagómez & Javier Orellana Polo, 2012. "Monetary policy rules in a small open economy: an application to Mexico," Journal of Applied Economics, Universidad del CEMA, vol. 15, pages 259-286, November.
    2. Fiodendji, Komlan, 2015. "Que Nous Révèlent les Fonctions de Réaction à Propos des Préférences des Banques Centrales?
      [What Do Reaction Functions Tell Us About Central Bank’s Preferences?]
      ," MPRA Paper 66296, University Library of Munich, Germany.
    3. Cabrera, Nilda & Bejarano, Edilean & Savino Portugal, Marcelo, 2011. "Preferences of the Central Reserve Bank of Peru and optimal monetary policy rules in the inflation targeting regime," Working Papers 2011-010, Banco Central de Reserva del Perú.

    More about this item

    Keywords

    Interest Rate Rule; Structural Breaks; Inflation Targeting; Output Gap; Preferences; Macroeconomic Shocks;

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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