The gold standard was quite stable in the past: price level changes were relatively small, and trade cycles mild. However, its past stability does not guarantee nowadays. We show that of to shocks stemming from world market depends critically on size monetary stock relative extent these shocks. Every change decreasing lowers stability. discuss some consequences thesis too: first, any system eco...

This paper investigates to what extent a New Keynesian, monetary model with the addition of a microfounded, non-Walrasian labor market based on union bargaining is able to replicate key aspects of the business cycle. The presence of a representative union offers an explanation for two features of the cycle. First, it generates an endogenous mechanism which produces persistent responses of the e...

We develop a multi-sector sticky-price DSGE model that can endogenously deliver differential responses of prices to aggregate and sectoral shocks. Input-output production linkages induce across-sector pricing complementarities that contribute to a slow response of prices to aggregate shocks. In turn, labor-market segmentation at the sectoral level induces within-sector pricing substitutability,...

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper forecasts inflation in Sudan following two methodo...

This paper utilizes the nonparametric functional autoregressive approach (FAR) to model the time-varying distribution of UK monthly inflation rates using disaggregated cross-sectional data. Our approach is free of any assumptions on the class or structure of the density functions themselves, or the number of dimensions in which the densities may vary. The “pseudo real time” in-sample forecastin...

We developed a simple monetary model to study the effects of tax evasion on the optimal inflation tax. The model is constructed so that inflation might be an indirect way of taxing the underground sector of the economy. We show that while there are theoretical reasons for positive optimal inflation rates, the effects are quantitatively small, even in countries with large underground sectors. We...

I apply the Johansen and Swensen (1999, 2004) method of testing exact rational expectations within the cointegrated VAR (Vector Auto-Regressive) model, to testing the New Keynesian (NK) model. This method permits the testing of rational expectation systems, while allowing for non-stationary data. The NK-model is tested on quarterly U.S. and Euro area time series data. I find that the restrictio...

Inflation Adjustment and Labour Market Structures: Evidence from a Multi-Country Study An empirical analysis of the impact of labour market structures on the response of inflation to macroeconomic shocks is presented. Results based on a 20 country panel show that if labour market coordination is high, the effect on inflation of movements in unemployment, import prices, tax rates and productivit...

Ito has applied the non-Walrasian regime switching methodology to the Solovian neoclassical growth model and discussed the occurrence of regimes of full employment, overemployment and underemployment and the different dynamical systems (to be patched up) these regimes give rise to. We shall show in this paper that nothing of this sort really characterizes Solovian growth with non market-clearin...

This paper aims to examine the impacts of oil-price shocks on China’s price levels. To that end, we develop a partial transmission input-output model that captures the uniqueness of the Chinese market. We hypothesize and simulate price control, market factors and technology substitution the three main factors that restrict the functioning of a price pass-through mechanism during oil-price shock...