We have found that this inflation-targeting system has been very effective in promoting low, stable, and predictable inflation in Canada. Following a period of higher and more variable inflation in the 1970s and 1980s, the inflation-control targets have helped to anchor monetary policy. After the agreement came into effect, inflation quickly fell into the target range.
But the rebuild period can also lead to a demand surge that puts upward pressure on activity. Effective institutions and legal frameworks, 7 including solid building codes, the quality of governments and access to credit and insurance,8 can all influence the ultimate impact, while even slight differences in geographic location can play a significant role.