We study the implications of trend inflation for an economy’s long-run growth rate. To do so, we extend a New Keynesian model to allow for endogenous growth. The defining characteristic of the New Keynesian framework is that inflation and nominal price stickiness together induce relative price dispersion and thus reduce monopoly profits. When the framework is embedded in an endogenous growth mo...

This paper uncovers the Phillips curve trade-off perceived by U.S. monetary policymakers. For that purpose we use data on individual forecasts for unemployment and inflation submitted by each individual FOMC member, which was recently made available for the period 19921998. The results point to significant changes in the perceived trade-off over time with the Phillips curve flattening and the i...

The paper empirically examines the relationship between trade openness and the level of corruption in Pakistan using annual time-series data for the period 1984 to 2007. The analysis shows that trade openness negatively affects corruption in Pakistan. The results are robust to controlling for other corruption determining variables and various model specifications. Sensitivity analysis shows tha...

The relationship between inflation and relative price variability (RPV) is widely believed to be positive and stable. Using disaggregated CPI data for the U.S. and Japan, however, this study finds that the relationship is neither linear nor stable over time. The overall relationship is approximately U-shaped and symmetric around a certain threshold: a positive correlation on one side but a trad...

Convertibility is an important factor in international trade where instruments valued in different currencies will be exchanged. Convertibility can be either total manner or a partial manner. However, whatever the type of convertibility, there will be advantages and disadvantages to  the economy of a country of which has  made a convertibility of its national currency. Convertibility was studie...

The relationship between inflation and relative price variability (RPV) is widely believed to be positive and stable. Using disaggregated CPI data for the U.S. and Japan, however, this study finds that the relationship is neither linear nor stable over time. The overall relationship is approximately U-shaped and symmetric around a certain threshold: a positive correlation on one side but a trad...

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...