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Canada's Pioneering Experience with a Flexible Exchange Rate in the 1950s
Michael D. Bordo
Ali Dib
Lawrence Schembri
其他書名
(hard) Lessons Learned for Monetary Policy in a Small Open Economy
出版
National Bureau of Economic Research
, 2007
URL
http://books.google.com.hk/books?id=GhPwAAAAMAAJ&hl=&source=gbs_api
註釋
This paper revisits Canada's pioneering experience with floating exchange rate over the period 1950-1962. It examines whether the floating rate was the best option for Canada in the 1950s by developing and estimating a New Keynesian small open economy model of the Canadian economy. The model is then used to conduct a counterfactual analysis of the impact of different monetary policies and exchange rate regimes. The main finding indicates that the flexible exchange rate helped reduce the volatility of key macro-economic variables. The Canadian monetary authorities, however, clearly did not understand all of the implications of conducting monetary policy under a flexible exchange rate and a high degree of capital mobility. The paper confirms that monetary policy was more volatile in the post-1957 period and Canada's macroeconomic performance suffered as a result.
