The Efficacy and Cost of Regime Shifts in Inflation Policies: Evidence from New Zealand and Sweden
AbstractIn this paper a comparative study of the regime shift in inflation policies in New Zealand and Sweden is performed. We use a non-parametric regression method to decompose the inflation time series into three components of variation: a long-term trend, a medium-term (cyclical and transient variations) trend and a short-term shocks component. This allows us to study the transition process from the high inflation characterizing the end of the seventies and the eighties to the low inflation observed during the nineties. We find that in New Zealand, although it is initially delayed, the decrease in inflation happens at a faster pace than in Sweden. This may indicate that reforms were more efficient in New Zealand. We also show a clear link between the rising unemployment and the transition from high to low inflation. Furthermore, while in New Zealand a downward adjustment of the unemployment rate happens directly after the transition period, in Sweden there seems to be persistence in high unemployment.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 475.
Length: 19 pages
Date of creation: 09 Oct 1998
Date of revision:
Publication status: Forthcoming in Applied Economics, 2001, pages 217-224.
Contact details of provider:
Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Web page: http://www.econ.umu.se/
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Inflation regimes; unemployement; non-parametric regression; components of variation;
Other versions of this item:
- Sven-Olov Daunfeldt & Xavier De Luna, 2001. "The efficacy and cost of regime shifts in inflation policies-Evidence from New Zealand and Sweden," Applied Economics, Taylor and Francis Journals, vol. 33(2), pages 217-224.
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-10-15 (All new papers)
- NEP-ECM-1998-10-19 (Econometrics)
- NEP-MON-1998-10-15 (Monetary Economics)
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- Daunfeldt, Sven-Olov & Hellström, Jörgen & Landström, Mats, 2008.
"Why Do Politicians Implement Central Bank Independence Reforms?,"
HUI Working Papers
13, HUI Research.
- Daunfeldt, Sven-Olov & Hellström, Jörgen & Landström, Mats, 2009. "Why Do Politicians Implement Central Bank Independence Reforms?," Ratio Working Papers 143, The Ratio Institute.
- Daunfeldt, Sven-Olov & Hellström, Jörgen & Landström, Mats, 2008. "Why Do Politicians Implement Central Bank Independence Reforms?," UmeÃ¥ Economic Studies 733, Umeå University, Department of Economics.
- Chatterjee, Srikanta & Dalziel, Paul & Daunfeldt, Sven-Olov & Podder, Nripesh, 2008. "Income Inequality and Transformation of the Welfare State: A Comparative Study of the Reforms in New Zealand and Sweden," HUI Working Papers 20, HUI Research.
- Daunfeldt, Sven-Olov & de Luna, Xavier, 2002. "Central Bank Independence and Price Stability: Evidence from 23 OECD-countries," UmeÃ¥ Economic Studies 589, Umeå University, Department of Economics, revised 12 Jun 2003.
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