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- Title
Unanticipated inflation and real output: the Canadian evidence.
- Authors
Darrat, Ali F.
- Abstract
This paper investigates empirically for Canada the validity of the expectations-adjusted supply function (EASE) hypothesis that only the unanticipated component of inflation can be transmitted to the real side of the economy. Using the quarterly data over 1960 to 1982, an a theoretical statistical procedure is employed to decompose the Canadian inflation into anticipated and unanticipated components. The empirical results lend strong support to the EASF hypothesis in that only unanticipated inflation exerts a significant impact upon real output. These results then cast doubts on the appropriateness of systematic (anticipated) monetary policies as a tool to influence real economic activity in Canada.
- Subjects
CANADA; PRICE inflation; SUPPLY &; demand; CANADIAN economy
- Publication
Canadian Journal of Economics, 1985, Vol 18, Issue 1, p146
- ISSN
0008-4085
- Publication type
Article
- DOI
10.2307/135119