scholarly journals Is there a Trade-Off Between Inflation Variability and Output-Gap Variability in the EMU Countries?

2003 ◽  
Author(s):  
Philip Arestis ◽  
Konstantinos Mouratidis
Keyword(s):  
Output Gap ◽  
Trade Off ◽  
Inflation Variability

Does Inflation Targeting Affect the Trade-off Between Output Gap and Inflation Variability?

2002 ◽  
Vol 70 (4) ◽  
pp. 528-545 ◽  
Author(s):  
Philip Arestis ◽  
Guglielmo Maria Caporale ◽  
Andrea Cipollini
Keyword(s):  
Inflation Targeting ◽  
Output Gap ◽  
Trade Off ◽  
Inflation Variability

POLICY PREFERENCES AND POLICY MAKERS' BELIEFS: THE GREAT INFLATION

2016 ◽  
Vol 21 (8) ◽  
pp. 1957-1995 ◽  
Author(s):  
Gabriela Best
Keyword(s):  
Monetary Policy ◽  
Federal Reserve ◽  
Alternative Explanation ◽  
The United States ◽  
Output Gap ◽  
Policy Makers ◽  
Trade Off ◽  
Great Inflation ◽  
Inflation Stabilization ◽  
Potential Channels

The literature has proposed two potential channels through which monetary policy played a role in the Great Inflation in the United States. One approach posits that the Federal Reserve held misperceptions of the economy. An alternative explanation contends that policy makers shifted preferences from an output gap stabilization goal toward inflation stabilization after 1979. This paper develops a medium-scale macroeconomic model that incorporates real-timelearningby policy makers as well as a (potential) shift in policy makers' preferences. The empirical results show that combining both views—distorted policy makers' beliefs about the persistence of inflation and the inflation-output gap trade-off, accompanied by a stronger preference for inflation stabilization after 1979—illuminates the role played by monetary policy in propagating and ending the Great Inflation.

scholarly journals Inflation, its volatility and the inflation-growth tradeoff in India

2015 ◽  
Vol 10 (3) ◽  
pp. 350-361 ◽  
Author(s):  
Raghbendra Jha ◽  
Varsha S. Kulkarni
Keyword(s):  
Phillips Curve ◽  
Ordinary Least Squares ◽  
New Keynesian ◽  
Recent Analysis ◽  
Output Gap ◽  
Content Type ◽  
Inflation Volatility ◽  
Expected Inflation ◽  
The Usa ◽  
Inflation Variability

Purpose – The purpose of this paper is to amend the New Keynesian Phillips Curve (NKPC) model to include inflation volatility. It provides results on the determinants of inflation volatility and expected inflation volatility for ordinary least squares and autoregressive distributed lags (1,1) models and for change in inflation volatility and change in expected inflation volatility using error correction mechanism (ECM) models. Output gap affects change in expected inflation volatility alone (in the ECM model) and not in the other models. Major determinants of inflation volatility and expected inflation volatility are identified. To the best of the authors knowledge this is the first paper to augment the NKPC to include inflation volatility. Design/methodology/approach – Recent analysis has indicated the importance of inflation volatility for the monetary transmission mechanism in India (Kapur and Behera, 2012). In the analysis of such monetary policy mechanisms the NKPC has proved to be a useful tool. Thus Patra and Ray (2010) for India and Brissimis and Magginas (2008) for the USA find considerable support for the standard NKPC. The purpose of this paper is to synthesize and integrate these two models by extending the standard NKPC framework to include inflation volatility and test its significance for the case of India. Findings – In the case of inflation volatility output gap, lagged output gap and lagged inflation volatility are all insignificant. The level of inflation has a negative significant impact whereas the level of expected inflation has a positive and significant impact. In the case of expected inflation volatility lagged output gap has a negative and significant impact, the price level has a positive and significant impact whereas expected price has a negative and weakly significant impact. ECM reveals change in inflation variability falls significantly with lagged inflation volatility and lagged inflation and less significantly with change in expected inflation. It rises with lagged expected inflation although the coefficient is only weakly significant. Lagged output gap and change in output gap are insignificant. Originality/value – This paper makes two original contributions. First, it extends the New Keynesian framework to include inflation volatility. Second, it estimates this model for India. To the best of the authors knowledge this is the first paper to make these contributions.

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