Bank of Canada paper tests ‘inflation tax’ in lab experiment
Experimental design could be used to test other aspects of monetary policy, researchers say
Research published by the Bank of Canada outlines the results of a laboratory experiment designed to test aspects of monetary theory, notably the existence of an “inflation tax”.
Authors Janet Hua Jiang, Daniela Puzzello and Cathy Zhang carried out the experiments in 2018 and 2019, using undergraduates as their test subjects. Participants were paid $5 to take part in the experiment, plus any earnings from a “market game”. Average earnings were $25.67 in an experiment that lasted roughly two
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