the relationship between productivity of economic sectors, effective real exchange rate, and purchasing power is a burning economic issue. based on the “balassa – samuelson” theory, higher economic productivity for tradeable goods leads to an increase in effective real exchange rate which is indicative of higher value of domestic money and higher purchasing power of money. the purpose of this s...

Phillips curves are generally estimated under the assumption of linearity and parameter constancy. Linear models of inflation, however, have recently been criticized for their poor forecasting performance. The author investigates the linearity and constancy assumptions of a standard reduced-form Phillips curve for Canada using two different techniques: (i) the methodology proposed by Bai and Pe...

Making capital and investment is the main driving forces of economic development. Based on the investment sensitivity to the changes of some of macro-economic variables and risk and uncertainty, the present study evaluated the effective factors on investment in private sector in Iran during 1980-2007. At first, the uncertainty variables of real informal exchange rate, nominal interest rate and ...

a r t i c l e i n f o This paper estimates a Markov-switching dynamic stochastic general equilibrium (MS-DSGE) model that allows shifts in the monetary policy rule coefficients as well as the shock volatilities with Korean data ranged from 1976 to 2013. We find that allowing for the regime-switching aspect both in monetary policy rules and shock volatil-ities is a crucial setup in improving the...

Experts believe that by lowering the interest rate on bank accounts, total cost of goods and services decreases, and secondly, investment production increases,  both of which lead to lower inflation and provide stable employment field, on the other hand, are concerned about the negative effects of lowering the interest rate without lowering inflation and know the underlying requirement of nomin...

Article history: Received 8 August 2011 Received in revised form 23 May 2012 Accepted 31 May 2012 Available online 13 June 2012 This paper shows that financial integration may reduce welfare in the presence of nominal price rigidity. From a policy perspective, the model implies that developing countries that are experiencing financial integration may attempt to alleviate the welfare cost of int...

The aim of Malcolm Edey’s paper is to review the debate on alternative monetarypolicy systems as they apply to Australia and to give a general rationale for the system we have, which is the inflation target. The paper focuses on the choice between policy systems and not on the detailed parameters of individual systems. Discussion of those details is in other papers of the conference. Four types...