In this chapter, Paul Jenkins and Brian O'Reilly survey the monetary policy developments in the 1990s, focusing on links between monetary policy and the economic well-being of Canadians. The Bank of Canada economists do admit that tight monetary policy in the early 1990s hurt growth in the short-term, but they argue that such action was necessary to ratchet down entrenched inflationary expectations. Moreover, they argue that stagnation in the early part of the decade was not simply the result of monetary policy, but also reflected a weak US economy and structural problems in the Canadian economy.
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