Article

A Further Analysis of Exchange Rate Targeting in Canada

07/1994;
Source: RePEc

ABSTRACT In a recent paper Mercenier and Sekkat (1988) conclude that the Bank of Canada has followed a policy of exchange rate targeting using the money supply. We reexamine their results using a different estimation approach and with different assumptions about the forcing process of the exogenous variables. We also extend the sample period to include more recent observations. While we find some weak evidence to support their conclusion, the results, in general, suggest that the Bank of Canada has not used the money supply to target the Canada-U.S. exchange rate.

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Keywords

Canada-U.S. exchange rate
 
different assumptions
 
different estimation approach
 
exchange rate
 
forcing process
 
money supply
 
recent observations
 
recent paper Mercenier
 
sample period
 
weak evidence