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Article: Inflation targeting in practice: Further evidence
- Article from:
- Contemporary Economic Policy
- Article date:
- July 1, 1999
- Author:
CopyrightCopyright Western Economic Association Jul 1999. Provided by ProQuest LLC. (Hide copyright information)
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This paper empirically investigates the plausibility, which has been argued but not fully established, that the efficacy of the inflation-targeting strategy recently implemented by New Zealand, Canada, and the U.K. has been an artifact of a global disinflationary environment. A data decomposition procedure, which involves cointegration and canonical correlation analysis, is used to remove common trend and cyclical components from historical data that these three countries share with their nontargeting neighboring countries, namely, Australia, the U.S., and Germany, respectively. Simulations based on resulting country-specific data for inflation and other economic aggregates reveal scant ...