Canada's inflation success down to more than luck

The price level in Canada has strayed little from the path implied by the 2% inflation target because expectations and interest rates are determined in a way that is consistent with price-level-path targeting, research published by the international Monetary Fund finds.

Using econometric analysis with Bayesian estimation suggests that there is little chance that luck is behind the Bank of Canada maintaining inflation near the target, introduced in December 1994. The explanation that expectations

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