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Making the most of High Inflation

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  • Wojciech Charemza

    ()

  • Svetlana Makarova

    ()

  • Imran Shah

    ()

Abstract

The paper analyses inflationary real effects in situation where there are frequent episodes of high inflation. It is conjectured with the increase in high inflation, and when differences between the expected and output-neutral inflation become large, output stimulation through inflationary shocks is more effective than otherwise. It is shown that this conjecture is valid for most countries with high inflation episodes, where inflation is greater than 4.8% for at least 25% of quarterly observations. This leads to a simple policy prescription that anti-inflationary monetary decisions should be undertaken in periods where the expected inflation exceeds output-neutral.

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Bibliographic Info

Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 13/01.

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Date of creation: Jan 2013
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Handle: RePEc:lec:leecon:13/01

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Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
Phone: +44 (0)116 252 2887
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Web page: http://www2.le.ac.uk/departments/economics
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Related research

Keywords: High Inflation Episodes; Real Effects Indicators; Developing Countries; Impulse Response Analysis;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Monetary stimulus in high-inflation regimes
    by Economic Logician in Economic Logic on 2013-03-06 15:17:00

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