@techreport{NBERw13605,
 title = "Canada's Pioneering Experience with a Flexible Exchange Rate in the 1950s:(Hard) Lessons Learned for Monetary Policy in a Small Open Economy",
 author = "Michael D. Bordo and Ali Dib and Lawrence Schembri",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "13605",
 year = "2007",
 month = "November",
 URL = "http://www.nber.org/papers/w13605",
 abstract = {This paper revisits Canada's pioneering experience with floating exchange rate over the period 1950-1962. It examines whether the floating rate was the best option for Canada in the 1950s by developing and estimating a New Keynesian small open economy model of the Canadian economy.  The model is then used to conduct a counterfactual analysis of the impact of different monetary policies and exchange rate regimes.  The main finding indicates that the flexible exchange rate helped reduce the volatility of key macro-economic variables.  The Canadian monetary authorities, however, clearly did not understand all of the implications of conducting monetary policy under a flexible exchange rate and a high degree of capital mobility.  The paper confirms that monetary policy was more volatile in the post-1957 period and Canada's macroeconomic performance suffered as a result.},
}