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High Inflation (high + inflation)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

The Success of Currency Reforms to End Great Inflations: An Empirical Analysis of 34 High Inflations

GERMAN ECONOMIC REVIEW, Issue 2 2009
Peter Bernholz
Great inflations; currency reforms; central bank independence; fixed exchange rate Abstract. The estimation of an ordered probit model for currency reforms attempting to end 31 hyperinflations and three huge inflations of the twentieth century shows that the introduction of an independent central bank and the adoption of a credibly fixed exchange rate are crucial for the success of a currency reform. In addition, currency reforms are demonstrated to be more difficult in centrally planned economies than in market economies. [source]

Do Crises Induce Reform?

ECONOMICS & POLITICS, Issue 2 2001
Simple Empirical Tests of Conventional Wisdom
We find evidence for the crisis-induces-reform hypothesis at extreme values of the inflation rate and the black market premium. Episodes of extremely high inflation or black market premiums are followed by periods of better performance than episodes of moderately high inflation or black market premiums. We fail to find similar evidence of the crisis hypothesis when crisis is measured as a high current account deficit, a high budget deficit, or a negative per capita growth rate. The pattern of foreign aid disbursements may help explain the results. Foreign aid is reduced at extreme values of inflation or the black market premium, while it is actually increased for more extreme values of the current account deficit and the budget deficit. [source]

How Important Is Money in the Conduct of Monetary Policy?

JOURNAL OF MONEY, CREDIT AND BANKING, Issue 8 2008
MICHAEL WOODFORD
monetarism; two-pillar strategy; cashless economy I consider some of the leading arguments for assigning an important role to tracking the growth of monetary aggregates when making decisions about monetary policy. First, I consider whether ignoring money means returning to the conceptual framework that allowed the high inflation of the 1970s. Second, I consider whether models of inflation determination with no role for money are incomplete, or inconsistent with elementary economic principles. Third, I consider the implications for monetary policy strategy of the empirical evidence for a long-run relationship between money growth and inflation. And fourth, I consider reasons why a monetary policy strategy based solely on short-run inflation forecasts derived from a Phillips curve may not be a reliable way of controlling inflation. I argue that none of these considerations provides a compelling reason to assign a prominent role to monetary aggregates in the conduct of monetary policy. [source]

Time Inconsistency and Free-Riding in a Monetary Union

JOURNAL OF MONEY, CREDIT AND BANKING, Issue 7 2008
VARADARAJAN V. CHARI
monetary regime; fixed exchange rates; dollarization; European Union; Maastricht Treaty In monetary unions, a time inconsistency problem in monetary policy leads to a novel type of free-rider problem in the setting of non-monetary policies. The free-rider problem leads union members to pursue lax non-monetary policies that induce the monetary authority to generate high inflation. Free-riding can be mitigated by imposing constraints on non-monetary policies. Without a time inconsistency problem, the union has no free-rider problem; then constraints on non-monetary policies are unnecessary and possibly harmful. This theory is here detailed and applied to several non-monetary policies: labor market policy, fiscal policy, and bank regulation. [source]

It's the Economy Stupid: Macroeconomics and Federal Elections in Australia

THE ECONOMIC RECORD, Issue 235 2000
LISA CAMERON
In this paper we examine the impact of macroeconomic conditions on Federal electoral performance in 20th-century Australia. We find that the electorate penalizes a government for high inflation and high unemployment relative to trend. Real GDP growth and real wage growth were not found to have a systematic relationship with incumbent vote share at the Federal level. We also examine the voteshare of the Federal incumbent in three electorates: the safe Liberal seat of Kooyong, the safe Labor seat of Melbourne Pans, and the swinging seat of Latrobe. We find some evidence that unemployment affects electoral outcomes in the swinging seat, but no macroeconomic variables affect outcomes in the safe seats. [source]

Exchange Rate Pass-through in China

CHINA AND WORLD ECONOMY, Issue 1 2009
Chang Shu
E31; F31; F32 Abstract During the second half of 2007 and early part of 2008 when there were intense inflationary pressures in China, RMB appreciation was advocated as a means of helping to curb inflation. The effectiveness of appreciation in controlling inflation depends on the impact of exchange rate movements on import and domestic prices. Our analysis finds fairly large and speedy exchange rate pass-through (ERPT) to import prices: 50 and 60 percent for the short run and long run, respectively. However, the degree of ERPT decreases along the price chain from upstream to downstream prices. ERPT for consumer prices, the most downstream prices, is much milder and has substantial lags. A 10-percent rise in the nominal effective exchange rate will dampen consumer prices by 1.1 percent within a year, with very little pass-through in the first half year, and by 2.0 percent over the long run. These findings, particularly the ERPT to consumer prices, suggest that RMB appreciation can help to reduce inflationary pressures over the longer term. However, it is unlikely to provide rapid relief to the current round of high inflation because of the long lags in ERPT. The RMB needs to strengthen in effective terms to exert the desired dampening impact on prices. [source]