In Canada, targeting the inflation rate was intended as a temporary measure during a transition to price … following account, changing beliefs about the stability or otherwise of ongoing inflation, the capacity of a flexible exchange … modelling inflation targeting arrived on the scene only as the Canadian regime was becoming well established. …

We use narrative evidence along with a novel database of real-time data and forecasts from the Bank of Canada's staff … monetary policy in Canada. We show that it is crucial to take into account the break in the conduct of monetary policy caused … by the announcement of inflation targeting in 1991 when estimating the effects of monetary policy. For instance, we find …