Title: Canada's pioneering experience with a flexible exchange rate in the 1950s
Description: "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"--National Bureau of Economic Research web site.