Price-level targeting (PT) is compared with inflation targeting (IT) in a DSGE model augmented with imperfections in both debt and equity markets. The PT regime outperforms the IT regime, and the gain depends on the degree of financial market frictions. This is because inflation is better...

We develop a dynamic, stochastic, general-equilibrium (DSGE) model due to Ireland (1997) and others and estimate it for the Canadian economy to analyse the real effects of monetary policy shocks. To generate high and persistent real effects, the model combines nominal frictions in the form of...

This paper assesses the out-of-sample forecasting accuracy of the New Keynesian Model for Canada. We estimate a variant of the model on a series of rolling subsamples, computing out-of-sample forecasts one to eight quarters ahead at each step. We compare these forecasts with those arising from...