China has experienced remarkably stable growth and inflation in recent years according to official statistics. We use systematic discrepancies between cross-sectional and time-series Engel curves to construct alternative estimates of Chinese growth and inflation. Our estimates suggest that official statistics present a smoothed version of reality. Official inflation rose in the 2000s, but our e...

this research follows two aims in case of the iranian economy. first, study of the presence of inflation persistency, and second, looking for an optimal monetary policy rule. results show that inflation in the economy of iran is persistent, in which, short-term and long-term effects of monetary policy should be considered. for this purpose, a loss function for the central bank with arguments of...

This paper provides new insight into the relationship between inflation and consumer price setting by examining a large data set of Mexican consumer prices covering episodes of both low and high inflation, as well as the transition between the two. Overall, the economy shares several characteristics with time-dependent models when the annual inflation rate is low (below 10-15%), while displayin...

Much of the inflation forecasting literature examines the ability of macroeconomic indicators to accurately predict mean inflation. For the period after 1984, existing empirical evidence largely suggests that the likelihood of accurately predicting inflation using macroeconomic indicators is no better than a random walk model. We expand the scope of inflation predictability by exploring whether...

This paper uses a cross-state panel for the United States over the 1976 to 2007 period to assess the relationship between income inequality and the inflation rate. Employing a semiparametric instrument variable (IV) estimator, we find that the relationship depends on the level of the inflation rate. A positive relationship occurs only if the states exceed a threshold level of inflation rate. Be...

 decline in private sector investment expenditures, crowding-out effect, lack of conditions for optimal allocation of resources, reduction inefficiency, and the possibility of increasing inequality in income distribution are considered as the effects of increasing the government size according to many theoretical studies and empirical evidence. Hence, identifying the determinants of the governm...

The effects of increasing openness on economic growth and inflation are examined for the South Korean economy before the economic crisis of 1997/98. The framework of analysis is a seven-variable vector autoregressive model. The impulse response functions indicate that a shock to openness has negative effects on the growth rates of output and of the price level, but no longer-run effects. The va...

We show that the New-Keynesian (NK) model of inflation can be interpreted as a forward-looking cointegrated model. This allows us to model firms’ expectations about marginal costs in a simple VAR framework and develop relatively simple formal tests of the model which bypass the econometric problems faced by other approaches. We show that a series of Granger-causality tests can indicate whether ...

We use a state-dependent model where pricing rules are optimal to examine the costs of a money-based disinflation under various assumptions about the credibility of the policy change. Our analysis allows us to relate actual credibility and future inflation inertia to the asymmetry of the price deviation distribution. An important implication of our statedependent setting is that disinflation ca...

This paper develops a dynamic stochastic general equilibrium (DSGE) model with sticky prices where agents have imperfect information on the stance and direction of monetary policy. Agents respond by using Kalman filtering to unravel persistent and temporary monetary policy changes in order to form optimal forecasts of future policy actions. Our results show that a sticky price model with imperf...