This paper assesses the effect of expected inflation and inflation risk on interest rates within the Fisher hypothesis framework. Autoregressive Conditional Heteroscedastic models are used to estimate the conditional variability of inflation as a proxy for risk. With the UK quarterly data from 1958:4 to 1994:4, we found that both the expected inflation and the conditional variability of inflati...

This paper aims to investigate the links between exchange rate pass-through (ERPT) and monetary policy. We examine the degree of ERPT to consumer prices for 11 emerging markets (6 inflation targeters and 5 non-inflation targeters) using both multivariate cointegrated VAR (CVAR) and impulse responses derived from the vector error correction model (VECM). Results of cointegration analyses suggest...

Abstract: Many empirical studies have indicated that inflation exhibits very high persistence throughout the post-war period in nearly every industrial economy. In this paper we challenge this conventional wisdom and instead argue that in many cases, high inflation persistence is an artifact of empirical techniques that fail to account for occasional shifts in the monetary policy regime. In par...

Inflation Targeting (IT) has become a prevalent monetary policy framework in the past three decades, as more central banks adopted and maintained price stability their primary mandate. Using dataset of 68 major advanced countries emerging markets economies, this paper evaluates effects inflation targeting countries’ track records on macroeconomic performance, measured by real GDP growth CPI inf...

We present a simple agency model where agents can inflate the price that principals pay for goods needed to start an investment project. High and variable inflation is assumed to increase the cost of monitoring the agent. We then show how this can lead to higher corruption and lower investment in equilibrium. We also document a positive relationship between corruption and inflation variability ...

This paper estimates a time-varying AR-GARCH model of inflation producing measures of inflation uncertainty for the euro area, and investigates the linkages between them in a VAR framework, also allowing for the possible impact of the policy regime change associated with the start of EMU in 1999. The main findings are as follows. Steady-state inflation and inflation uncertainty have declined st...

Background: One of the most fundamental objectives of the macroeconomic policies is to realize the relationship between economic growth and inflation. According to some monetary policy advisors, inflation reflects erosion in consumer’s purchasing power. Inflation as an important economic variable, affect the economic growth and its impact on economic growth has been proposed in various theories...

Inflation targeting has been widely adopted in both developed and emerging economies. In this essay, I survey the evidence on the effects of inflation targeting on macroeconomic performance and assess what lessons this evidence provides for inflation targeting and the design of monetary policy. While macroeconomic experiences among both inflation targeting and non-targeting developed economies ...

The Polish Government, in 1977, inaugurated a new pension program that made old-age and invalidity benefits available for the first time to most farmers in that country. The evolution and eventual failure of that program were closely intertwined with a growing national economic crisis, manifested in widespread popular unrest and culminating in emergence of the Solidarity movement. The farmers' ...

Following a suggestion by Gasperini and Veneziano, that String Cosmology can be reconciled with Inflation and, hence, with the Standard Big Bang, we display an analytical solution which possesses four interesting properties: (1) it is non-singular; (2) it distinguishes the dynamics of the external scale factor, a(t), from that of the internal one, b(t); (3) it exhibits a non-monotonic behavior ...