On the Nature and the Stability of the Canadian Phillips Curve

Maral Kichian

Staff Working Papers from Bank of Canada

Abstract: This paper empirically determines why, during the 1990s, inflation in Canada was consistently more stable than predicted by the fixed-coefficients Phillips curve. A time-varying-coefficient model, where all the parameters adjust simultaneously, shows that the behaviour of expectations was probably a major contributing factor. A decrease in the value of the coefficient on the first difference of the output gap also seems to have influenced the observed pattern of inflation. Finally, pass-through of relative price shocks into domestic prices is shown to have been low since 1983.

Keywords: Business fluctuations and cycles; Econometric and statistical methods; Inflation and prices (search for similar items in EconPapers)
JEL-codes: E37 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2001
New Economics Papers: this item is included in nep-ltv
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:01-4

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