Flexible Inflation Forecast Targeting: Evidence from Canada

24 Pages Posted: 31 Jul 2014

See all articles by Glenn Otto

Glenn Otto

UNSW Australia Business School, School of Economics

Graham M. Voss

University of Victoria - Department of Economics

Date Written: May/mai 2014

Abstract

English Abstract: We test whether the Bank of Canada pursues a flexible inflation forecast target, one that weights output growth as well as inflation. For the period 1996–2007, we find evidence that the Bank did effectively pursue such a target over the forecast horizon of 12 to 18 months. We find the relative weight that the Bank gives to output growth in its target to be positive and statistically significant within the range of 0.2 to 0.4.

French Abstract: La poursuite de cibles de prévision d'inflation flexibles : résultats pour le Canada. On met au test la proposition à savoir si la Banque du Canada poursuit une cible flexible de prévision d'inflation - une cible qui tient compte de la croissance du produit tout autant que l'inflation. Pour la période 1996–2007, les résultats montrent que la Banque a poursuivi une cible sur un horizon de prévision de 12 à 18 mois. On montre que la pondération relative que la Banque donne à la croissance du produit dans son ciblage est positive et statistiquement significative dans l’éventail entre 0.2 et 0.4.

JEL Classification: E31, E58

Suggested Citation

Otto, Glenn and Voss, Graham M., Flexible Inflation Forecast Targeting: Evidence from Canada (May/mai 2014). Canadian Journal of Economics/Revue canadienne d'économique, Vol. 47, Issue 2, pp. 398-421, 2014. Available at SSRN: https://ssrn.com/abstract=2474409 or http://dx.doi.org/10.1111/caje.12083

Glenn Otto (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Graham M. Voss

University of Victoria - Department of Economics ( email )

Victoria V8W Y2Y, BC
Canada

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