Capacity Constraints Inflation And The Transmission Mechanism

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Capacity Constraints Inflation And The Transmission Mechanism

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Author : Mr.Peter B. Clark
language : en
Publisher: International Monetary Fund
Release Date : 1995-08-01

Capacity Constraints Inflation And The Transmission Mechanism written by Mr.Peter B. Clark and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995-08-01 with Business & Economics categories.

This paper develops a small model of the output-inflation process in the United States in order to examine the implications of alternative monetary policy rules. In particular, two types of policy rules are considered; a myopic rule where interest rates respond contemporaneously to output and inflation and a forward-looking policy rule that exploits information about the nature of transmission mechanism in the setting of interest rates. The model has two key features. First, there are significant lags between interest rates and aggregate demand conditions. Second, the model is based on an asymmetric model of inflation where positive deviations of aggregate demand from potential are more inflationary than negative deviations are disinflationary. As a consequence of this asymmetry, a policymaker that follows a myopic policy rule and allows the economy to overheat periodically will be forced to impose large recessions on the economy to keep inflation under control. The paper shows that the estimated degree of asymmetry implies that myopic policies can result in significant permanent losses in output. By contrast, policymakers that follow a forward-looking policy rule that avoids overheating will not only reduce the variance of output but also raise the mean level of output.

Capacity Constraints Inflation And The Transmission Mechanism

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Author : Douglas Laxton
language : en
Publisher:
Release Date : 2006

Capacity Constraints Inflation And The Transmission Mechanism written by Douglas Laxton and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.

This paper develops a small model of the output-inflation process in the United States in order to examine the implications of alternative monetary policy rules. In particular, two types of policy rules are considered; a myopic rule where interest rates respond contemporaneously to output and inflation and a forward-looking policy rule that exploits information about the nature of transmission mechanism in the setting of interest rates. The model has two key features. First, there are significant lags between interest rates and aggregate demand conditions. Second, the model is based on an asymmetric model of inflation where positive deviations of aggregate demand from potential are more inflationary than negative deviations are disinflationary. As a consequence of this asymmetry, a policymaker that follows a myopic policy rule and allows the economy to overheat periodically will be forced to impose large recessions on the economy to keep inflation under control. The paper shows that the estimated degree of asymmetry implies that myopic policies can result in significant permanent losses in output. By contrast, policymakers that follow a forward-looking policy rule that avoids overheating will not only reduce the variance of output but also raise the mean level of output.

Supply Chain Constraints And Inflation

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Author : Diego A. Comin
language : en
Publisher:
Release Date : 2023

Supply Chain Constraints And Inflation written by Diego A. Comin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023 with categories.

We develop a multisector, open economy, New Keynesian framework to evaluate how potentially binding capacity constraints, and shocks to them, shape inflation. We show that binding constraints for domestic and foreign producers shift domestic and import price Phillips Curves up, similar to reduced-form markup shocks. Further, data on prices and quantities together identify whether constraints bind due to increased demand or reductions in capacity. Applying the model to interpret recent US data, we find that binding constraints explain half of the increase in inflation during 2021-2022. In particular, tight capacity served to amplify the impact of loose monetary policy in 2021, fueling the inflation takeoff.

Document De Travail

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Author :
language : en
Publisher:
Release Date : 1998

Document De Travail written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998 with Canada categories.

Inflation Expectations

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Author : Peter J. N. Sinclair
language : en
Publisher: Routledge
Release Date : 2009-12-16

Inflation Expectations written by Peter J. N. Sinclair and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-12-16 with Business & Economics categories.

Inflation is regarded by the many as a menace that damages business and can only make life worse for households. Keeping it low depends critically on ensuring that firms and workers expect it to be low. So expectations of inflation are a key influence on national economic welfare. This collection pulls together a galaxy of world experts (including Roy Batchelor, Richard Curtin and Staffan Linden) on inflation expectations to debate different aspects of the issues involved. The main focus of the volume is on likely inflation developments. A number of factors have led practitioners and academic observers of monetary policy to place increasing emphasis recently on inflation expectations. One is the spread of inflation targeting, invented in New Zealand over 15 years ago, but now encompassing many important economies including Brazil, Canada, Israel and Great Britain. Even more significantly, the European Central Bank, the Bank of Japan and the United States Federal Bank are the leading members of another group of monetary institutions all considering or implementing moves in the same direction. A second is the large reduction in actual inflation that has been observed in most countries over the past decade or so. These considerations underscore the critical – and largely underrecognized - importance of inflation expectations. They emphasize the importance of the issues, and the great need for a volume that offers a clear, systematic treatment of them. This book, under the steely editorship of Peter Sinclair, should prove very important for policy makers and monetary economists alike.

Republic Of Moldova

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Author : International Monetary Fund. European Dept.
language : en
Publisher: International Monetary Fund
Release Date : 2020-03-18

Republic Of Moldova written by International Monetary Fund. European Dept. and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-03-18 with Social Science categories.

This Selected Issues paper provides a systematic assessment of Moldova’s governance and institutional frameworks. It follows guidelines approved by the IMF executive board, which were developed to deliver systematic and even-handed analysis on macroeconomically critical governance and institutional vulnerabilities. This paper also focuses on seven key areas for IMF engagement: corruption, rule of law, regulatory framework, fiscal governance, financial sector oversight, anti-money laundering/combating the financing of terrorism, and central bank governance. The analysis is based on internationally comparable data, diagnosis from IMF technical assistance reports, as well as other expert assessments. Strengthening the judiciary and rule of law and accelerating state-owned enterprises (SOE) reform are clear priorities. The widespread nature of governance vulnerabilities and institutional weaknesses in Moldova, combined with capacity constraints, creates challenges for policy formulation and prioritization. Policy efforts should therefore focus on strengthening rule of law and reforming Moldova’s judiciary system, as well as building capacity and increasing the autonomy of key institutions. Steadfast SOE reform would foster competition, investment, and productivity, while reducing fiscal risks.

Monetary Transmission Mechanism In The East African Community

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Author : Mr.Hamid Reza Davoodi
language : en
Publisher: International Monetary Fund
Release Date : 2013-02-06

Monetary Transmission Mechanism In The East African Community written by Mr.Hamid Reza Davoodi and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-02-06 with Business & Economics categories.

Do changes in monetary policy affect inflation and output in the East African Community (EAC)? We find that (i) Monetary Transmission Mechanism (MTM) tends to be generally weak when using standard statistical inferences, but somewhat strong when using non-standard inference methods; (ii) when MTM is present, the precise transmission channels and their importance differ across countries; and (iii) reserve money and the policy rate, two frequently used instruments of monetary policy, sometimes move in directions that exert offsetting expansionary and contractionary effects on inflation—posing challenges to harmonization of monetary policies across the EAC and transition to a future East African Monetary Union. The paper offers some suggestions for strengthening the MTM in the EAC.

Monetary Policy Transmission In Emerging Markets And Developing Economies

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Author : Mr.Luis Brandao-Marques
language : en
Publisher: International Monetary Fund
Release Date : 2020-02-21

Monetary Policy Transmission In Emerging Markets And Developing Economies written by Mr.Luis Brandao-Marques and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-02-21 with Business & Economics categories.

Central banks in emerging and developing economies (EMDEs) have been modernizing their monetary policy frameworks, often moving toward inflation targeting (IT). However, questions regarding the strength of monetary policy transmission from interest rates to inflation and output have often stalled progress. We conduct a novel empirical analysis using Jordà’s (2005) approach for 40 EMDEs to shed a light on monetary transmission in these countries. We find that interest rate hikes reduce output growth and inflation, once we explicitly account for the behavior of the exchange rate. Having a modern monetary policy framework—adopting IT and independent and transparent central banks—matters more for monetary transmission than financial development.

Central Bank Policy

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Author : Perry Warjiyo
language : en
Publisher: Emerald Group Publishing
Release Date : 2019-07-25

Central Bank Policy written by Perry Warjiyo and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-07-25 with Business & Economics categories.

Central Bank Policy: Theory and Practice analyses various policies, theories and practices adopted by central banks, as well as the institutional arrangements underlying the principles of good governance in policy-making. It is the first book to comprehensively discuss the latest theories and practices of central bank policy.

Working Paper Summaries July December 1995

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Author : International Monetary Fund. Editorial Division
language : en
Publisher:
Release Date : 1996

Working Paper Summaries July December 1995 written by International Monetary Fund. Editorial Division and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1996 with Economic policy categories.