Monetary Policy Rules in a Small Open DSGE Model: The Evidence from Canada

Student: Samigullina Yulia

Educational Programme: Economics (Bachelor)

Year of Graduation: 2018

In this paper simple DSGE model is built and calibrated by means of Canadian data. It is supposed, that Central Bank of Canada can choose between targeting domestic or CPI inflation. The purpose of this research is to investigate, which monetary policy rule is optimal in a sense of social welfare. According to results, in case of one particular shock (either inflation, either output gap) there is no sufficient difference between domestic and CPI inflation targeting. However, if shocks happen simultaneously domestic inflation targeting results in bigger value of social welfare function.

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