In this paper, we develop a new way to test hypotheses about policy-makers' targets, and we implement that test for Canadian monetary policy. If, for example, the Bank of Canada is using interest rates to target an inflation rate of 2 per cent and there is an 8-quarter lag in the effect of the...

We develop a new way to test hypotheses about policymakers' targets and implement that test for Canadian monetary policy. For example, if the Bank of Canada is targeting a 2 per cent inflation rate, and if the Bank's instrument takes eight quarters to affect inflation, then deviations of...

In contrast to recent "neo-Schumpeterian" models, which argue that business cycles are good for growth, the paper develops a "neo-Keynesian" model, characterized by monopolistically competitive firms which must set prices and produce output in advance of the realization of (stochastic) monetary...

Standard econometric tests for whether money causes output will be meaningless if monetary policy is chosen optimally to smooth fluctuations in output. If U.S. monetary policy were chosen to smooth U.S. output, we show that U.S. money will not Granger cause U.S. output. Indeed, as shown by Rowe...

Following Cuba’s "de-penalization," of the use of the dollar in August 1993, its role expanded rapidly. It now may be a more significant component of the overall money supply than the old peso. This generates some advantages but also contributes to some problems. The Government of Cuba has...