The purpose of this paper is to investigate the relationship between the inflation and inflation uncertainty in Iran. Using mixed models of self-exciting threshold autoregressive (SETAR) and generalized autoregressive conditional heteroskedasticity (GARCH), the inflation behaviors are examined for the period 1990M05-2013M10. This approach allows testing the hypotheses of Friedman-Ball, Pourgera...

Several authors report regressions where inflation slows economic growth. These results have been criticized because of their sensitivity to the sample analyzed and because there does not appear to be a strong theoretical reason for believing that inflation significantly lowers growth. Indeed, researchers have suggested that inflation proxies for inflation uncertainty or poor economic policy. M...

Relative price variability leads to inefficiencies in the allocation of resources that reduce real income (Fischer, 1981). Given the costs associated with relative price variability, the relation between inflation and relative price variability has been extensively researched and a positive relation between the two is documented for many countries and for varying time periods. Investigating the...

The paper presents a monetary model of endogenous growth and specifies an econometric model consistent with it. The economic model suggests a negative inflation-growth effect, and one that is stronger at lower levels of inflation. Empirical evaluation of the model is based on a large panel of OECD and APEC member countries over the years 1961-1997. The hypothesized negative inflation effect is ...

----------------------------------------------------------------------------------------------------------------------------Using over 100 years of U.S. data, we find that the long-run effects of inflation on consumption, investment, and output are positive. Thus, models generating long-term negative effects of inflation on output and consumption (including endogenous growth and RBC models with...

A central tenet of inflation targeting is that establishing and maintaining well-anchored inflation expectations are essential. In this paper, we reexamine the role of key elements of the inflation targeting framework towards this end, in the context of an economy where economic agents have an imperfect understanding of the macroeconomic landscape within which the public forms expectations and ...

The EMU accession countries are obliged to fulfill the Maastricht convergence criteria prior to entering the EMU. What should be the optimal monetary policy satisfying these criteria? To answer this question, the paper proposes a DSGE model of a two-sector small open economy. First, I derive the micro founded loss function that represents the objective function of the optimal monetary policy no...

The EU acceding countries are supposed to adopt the Euro as soon as economic convergence is achieved. This paper offers a methodology to quantify the economic consequences of an acceding country’s EMU entrance. A small macroeconomic two-country model is specified and combined with two different monetary policy regimes: (i) national monetary policy, (ii) monetary union. The performance of the tw...

This paper estimates reduced-form Phillips curves for Brazil with a framework of time series with unobserved components, in the spirit of Harvey (2011). However, we allow for expectations to play a key role using data from the Central Bank of Brazil’s Focus survey. Besides GDP, we also use industrial capacity utilization rate and IBC-Br index, as measures of economic activity. Our findings supp...