EconPapers    
Economics at your fingertips  
 

CHANGES IN THE INFLATION PROCESS IN CANADA: Evidence and Implications

Doug Hostland

Macroeconomics from University Library of Munich, Germany

Abstract: The Canadian economy is currently in transition from a period of disinflation to one with a very low and relatively stable inflation rate. Against this background, the author asks whether reduced-form parameters should be expected to be invariant to changes in the inflation process. This raises two empirical issues. The first relates to whether shifts in the Canadian inflation process can be identified over time. It appears so, since casual observation as well as various statistical procedures indicate that there was a unique period from the mid-1950s to the early 1970s when inflation was low and relatively stable. The second issue relates to whether there is evidence that parameter instability corresponds to shifts in the inflation regime. Statistical tests indicate that parameter instability is an important concern in reduced-form models of the inflation process, particularly for the early 1970s. The evidence for Canada suggests that inflation forecasts from reduced-form models may be unreliable in the presence of important changes in the inflation process.

JEL-codes: E (search for similar items in EconPapers)
Pages: 42 pages
Date: 1995-08-04
Note: 42 printed pages, compressed PostScript file. Other recent Bank of Canada working papers are listed on the last page of this report.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/9508/9508001.pdf (application/pdf)
https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/9508/9508001.ps.gz (application/postscript)

Related works:
Working Paper: CHANGES IN THE INFLATION PROCESS IN CANADA: Evidence and Implications Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:9508001

Access Statistics for this paper

More papers in Macroeconomics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().

 
Page updated 2021-06-22
Handle: RePEc:wpa:wuwpma:9508001