IDEAS home Printed from https://ideas.repec.org/a/prg/jnlpol/v2017y2017i1id1127p62-81.html
   My bibliography  Save this article

Dynamika inflácie v krajinách monetárnej únie: jej vplyv na spoločnú hospodársku politiku
[Inflation Dynamics in Countries of the Monetary Union: What is its Impact on the Common Economic Policy?]

Author

Listed:
  • Patrik Kupkovič

Abstract

This paper studies the impact of inflation dynamics on a common economic policy in the monetary union using a small New Keynesian model of the monetary union. We are considering two open economy versions of the Phillips curve: a typical New Keynesian Phillips curve with only forward looking dynamics and a hybrid New Keynesian Phillips curve with forward and backward looking dynamics. The main findings are as follows: (i) the backward looking dynamics (persistence) of inflation in the Phillips curve is an important determinant of the common economic policy in the monetary union; (ii) in the case of asymmetric dynamics of inflation in the monetary union countries, the country with more persistent inflation dynamics has a significant impact on the common economic policy.

Suggested Citation

  • Patrik Kupkovič, 2017. "Dynamika inflácie v krajinách monetárnej únie: jej vplyv na spoločnú hospodársku politiku [Inflation Dynamics in Countries of the Monetary Union: What is its Impact on the Common Economic Policy?]," Politická ekonomie, Prague University of Economics and Business, vol. 2017(1), pages 62-81.
    • Handle: RePEc:prg:jnlpol:v:2017:y:2017:i:1:id:1127:p:62-81
    DOI: 10.18267/j.polek.1127
    as

    Download full text from publisher

    File URL: http://polek.vse.cz/doi/10.18267/j.polek.1127.html
    Download Restriction: free of charge
    File URL: http://polek.vse.cz/doi/10.18267/j.polek.1127.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.polek.1127?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Celsa Machado & Ana Paula Ribeiro, 2010. "Monetary and Fiscal Policy Interactions in a Monetary Union with Country-size Asymmetry," CEF.UP Working Papers 1003, Universidade do Porto, Faculdade de Economia do Porto.
    2. Lukas Vogel & Werner Roeger & Bernhard Herz, 2013. "The Performance of Simple Fiscal Policy Rules in Monetary Union," Open Economies Review, Springer, vol. 24(1), pages 165-196, February.
    3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    4. Roberts John M., 2005. "How Well Does the New Keynesian Sticky-Price Model Fit the Data?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-39, September.
    5. David N. DeJong & Chetan Dave, 2011. "Structural Macroeconometrics Second Edition," Economics Books, Princeton University Press, edition 1, number 9622.
    6. Ferrero, Andrea, 2009. "Fiscal and monetary rules for a currency union," Journal of International Economics, Elsevier, vol. 77(1), pages 1-10, February.
    7. Bodenstein, Martin & Guerrieri, Luca & LaBriola, Joe, 2019. "Macroeconomic policy games," Journal of Monetary Economics, Elsevier, vol. 101(C), pages 64-81.
    8. Jondeau, Eric & Le Bihan, Herve, 2005. "Testing for the New Keynesian Phillips Curve. Additional international evidence," Economic Modelling, Elsevier, vol. 22(3), pages 521-550, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paulo Vieira & Celsa Machado & Ana Paula Ribeiro, 2016. "Optimal Fiscal Simple Rules for Small and Large Countries of a Monetary Union," EcoMod2016 9685, EcoMod.
    2. Ginters Bušs & Patrick Grüning, 2023. "Fiscal DSGE model for Latvia," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 23(1), pages 2173915-217.
    3. Auray, Stéphane & de Blas, Beatriz & Eyquem, Aurélien, 2011. "Ramsey policies in a small open economy with sticky prices and capital," Journal of Economic Dynamics and Control, Elsevier, vol. 35(9), pages 1531-1546, September.
    4. Celsa Machado & Ana Paula Ribeiro, 2011. "Stabilization Constraints from different-average Public Debt Levels in a Monetary Union with Country-size Asymmetry," EcoMod2011 3152, EcoMod.
    5. Shafik Hebous, 2011. "The Effects Of Discretionary Fiscal Policy On Macroeconomic Aggregates: A Reappraisal," Journal of Economic Surveys, Wiley Blackwell, vol. 25(4), pages 674-707, September.
    6. Constantino Hevia & Juan Pablo Nicolini, 2013. "Optimal Devaluations," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(1), pages 22-51, April.
    7. Sophocles Mavroeidis & Mikkel Plagborg-Møller & James H. Stock, 2014. "Empirical Evidence on Inflation Expectations in the New Keynesian Phillips Curve," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 124-188, March.
    8. Chengsi Zhang & Denise R. Osborn & Dong Heon Kim, 2008. "The New Keynesian Phillips Curve: From Sticky Inflation to Sticky Prices," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(4), pages 667-699, June.
    9. Choi, Yoonseok, 2021. "Inflation dynamics, the role of inflation at different horizons and inflation uncertainty," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 649-662.
    10. Stefan Hohberger & Lukas Vogel & Bernhard Herz, 2014. "Budgetary-Neutral Fiscal Policy Rules and External Adjustment," Open Economies Review, Springer, vol. 25(5), pages 909-936, November.
    11. Adam Hale Shapiro, 2008. "Estimating the New Keynesian Phillips Curve: A Vertical Production Chain Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(4), pages 627-666, June.
    12. Cole, Alexandre Lucas & Guerello, Chiara & Traficante, Guido, 2020. "One Emu Fiscal Policy For The Euro," Macroeconomic Dynamics, Cambridge University Press, vol. 24(6), pages 1437-1477, September.
    13. Chengsi Zhang & Joel Clovis, 2010. "The New Keynesian Phillips Curve of Rational Expectations: A Serial Correlation Extension," Journal of Applied Economics, Taylor & Francis Journals, vol. 13(1), pages 159-179, May.
    14. Jérôme Héricourt, 2004. "And if one size fit all after all? A counterfactual examination of the ECB monetary policy under Duisenberg presidency," Cahiers de la Maison des Sciences Economiques bla04004a, Université Panthéon-Sorbonne (Paris 1), revised Nov 2005.
    15. Maren Brede, 2016. "Budget-neutral fiscal rules targeting inflation differentials," SFB 649 Discussion Papers SFB649DP2016-007, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    16. Shawn Chen-Yu Leu, 2006. "A New Keynesian Perspective of Monetary Policy in Australia," Working Papers 2006.01, School of Economics, La Trobe University.
    17. Fujiwara, Ippei & Kam, Timothy & Sunakawa, Takeki, 2019. "Sustainable international monetary policy cooperation," Journal of Economic Dynamics and Control, Elsevier, vol. 106(C), pages 1-1.
    18. Jondeau, E. & Le Bihan, H., 2003. "ML vs GMM Estimates of Hybrid Macroeconomic Models (With an Application to the New Phillips Curve)," Working papers 103, Banque de France.
    19. Paloviita, Maritta, 2008. "Dynamics of inflation expectations in the euro area," Bank of Finland Scientific Monographs, Bank of Finland, volume 0, number sm2008_040.
    20. Ichiro Muto, 2009. "Estimating A New Keynesian Phillips Curve With A Corrected Measure Of Real Marginal Cost: Evidence In Japan," Economic Inquiry, Western Economic Association International, vol. 47(4), pages 667-684, October.

    More about this item

    Keywords

    typical New Keynessian Phillips curve; hybrid New Keynesian Phillips curve; economic policy; Monetary union;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlpol:v:2017:y:2017:i:1:id:1127:p:62-81. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.