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The Steady Inflation Rate of Economic Growth

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Author Info
Mardi Dungey
John Pitchford

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Abstract

This paper considers the existence of a path of GDP corresponding to steady inflation in the prices of domestic goods. We estimate the steady inflation rate of growth, denoted the SIRG, at a little over 4 per cent per annum in the post-float period. Changes in inflation are modelled as a nonlinear combination of growth and changes in import price inflation. Because import price inflation is more volatile than overall inflation, policy that targets overall inflation may require growth to fluctuate considerably, whereas growth can be steady if the target is steady inflation of domestic goods' prices.

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File URL: http://econrsss.anu.edu.au/pdf/DP414.pdf
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Publisher Info
Paper provided by Centre for Economic Policy Research, Research School of Social Sciences, Australian National University in its series CEPR Discussion Papers with number 414.

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Length: 32 pages
Date of creation: Dec 1999
Date of revision:
Handle: RePEc:auu:dpaper:414

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Web page: http://econrsss.anu.edu.au/
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Related research
Keywords: inflation; growth ; import prices; monetary policy;

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Find related papers by JEL classification:
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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  1. Debelle, Guy & Lowe, Philip, 1999. "The Natural Rate of Unemployment in Australia since the Seventies: A Comment," The Economic Record, The Economic Society of Australia, vol. 75(229), pages 171-72, June.
  2. Pierre L. Siklos, 1999. "Inflation-target design: changing inflation performance and persistence in industrial countries," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 46-58. [Downloadable!]
  3. Crosby, M. & Olekalns, N., 1997. "Inflation, Unemployment and the Nairu in Australia," Department of Economics - Working Papers Series 543, The University of Melbourne.
    Other versions:
  4. Stephen G. Cecchetti, 1998. "Policy rules and targets: framing the central banker's problem," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 1-14. [Downloadable!]
  5. McDonald, John, 1999. "A Most Unnatural Unemployment Rate for Australia," The Economic Record, The Economic Society of Australia, vol. 75(229), pages 167-70, June.
  6. Debelle, Guy & Vickery, James, 1998. "Is the Phillips Curve a Curve? Some Evidence and Implications for Australia," The Economic Record, The Economic Society of Australia, vol. 74(227), pages 384-98, December.
    Other versions:
  7. A. Steven Englander & Gary Stone, 1989. "Inflation expectations surveys as predictors of inflation and behavior in financial and labor markets," Research Paper 8918, Federal Reserve Bank of New York.
  8. Mardi Dungey & John Pitchford, 1998. "Prospects for Output and Employment Growth with Steady Inflation," RBA Annual Conference Volume, in: Guy Debelle & Jeff Borland (ed.), Unemployment and the Australian Labour Market Reserve Bank of Australia. [Downloadable!]
    Other versions:
  9. Laurence Ball, 1997. "Efficient Rules for Monetary Policy," NBER Working Papers 5952, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. DiNardo, J. & Moore, M.P., 1999. "The Phillips Curve is Back? Using Panel Data to Analyze the Relationship Between Unemployment and Inflation in an Open Economy," Papers 99-00-04, California Irvine - School of Social Sciences.
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  11. Jeff Borland & Steven Kennedy, 1998. "Dimensions, Structure and History of Australian Unemployment," RBA Annual Conference Volume, in: Guy Debelle & Jeff Borland (ed.), Unemployment and the Australian Labour Market Reserve Bank of Australia. [Downloadable!]
    Other versions:
  12. A. Steven Englander & Gary Stone, 1989. "Inflation expectations surveys as predictors of inflation and behavior in financial and labor markets," Quarterly Review, Federal Reserve Bank of New York, issue Fall, pages 20-32.
  13. John Pitchford, 1993. "The Exchange Rate and Macroeconomic Policy in Australia," RBA Annual Conference Volume, in: Adrian Blundell-Wignall (ed.), The Exchange Rate, International Trade and the Balance of Payments Reserve Bank of Australia. [Downloadable!]
  14. Groenewold, Nicolaas & Hagger, A J, 1998. "The Natural Unemployment Rate in Australia since the Seventies," The Economic Record, The Economic Society of Australia, vol. 74(224), pages 24-35, March.
  15. Staiger, Douglas & Stock, James H & Watson, Mark W, 1997. "The NAIRU, Unemployment and Monetary Policy," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 33-49, Winter. [Downloadable!] (restricted)
  16. David Gruen & Adrian Pagan & Christopher Thompson, 1999. "The Phillips Curve in Australia," RBA Research Discussion Papers rdp1999-01, Reserve Bank of Australia. [Downloadable!]
    Other versions:
  17. Bankim Chadha & Paul R. Masson & Guy Meredith, 1991. "Models of Inflation and the Costs of Disinflation," IMF Working Papers 91/97, International Monetary Fund.
  18. Dupasquier, Chantal & Ricketts, Nicholas, 1998. "Non-Linearities in the Output-Inflation Relationship: Some Empirical Results for Canada," Working Papers 98-14, Bank of Canada. [Downloadable!]
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