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The forecast performance of alternative models of inflation

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  • Yash P. Mehra

Abstract

It is inappropriate to ignore the behavior of money in explaining the generation and evolution of aggregate inflation over time. It is shown that over the period 1977 to 1987 an inflation model based on M2 demand describes more accurately the actual behavior of inflation than an expectations-augmented version of the Phillips curve.

Suggested Citation

  • Yash P. Mehra, 1988. "The forecast performance of alternative models of inflation," Economic Review, Federal Reserve Bank of Richmond, issue Sep, pages 10-18.
  • Handle: RePEc:fip:fedrer:y:1988:i:sep:p:10-18:n:v.74no.5
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    File URL: https://fraser.stlouisfed.org/files/docs/publications/frbrichreview/rev_frbrich198809.pdf
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    References listed on IDEAS

    as
    1. Fama, Eugene F., 1983. "Financial intermediation and price level control," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 7-28.
    2. Rasche, Robert H., 1987. "M1 -- Velocity and money-demand functions: Do stable relationships exist?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 27(1), pages 9-88, January.
    3. Reichenstein, William & Elliott, J. Walter, 1987. "A comparison of models of long-term inflationary expectations," Journal of Monetary Economics, Elsevier, vol. 19(3), pages 405-425, May.
    4. Hetzel, Robert L, 1984. "Estimating Money Demand Functions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(2), pages 185-193, May.
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    Cited by:

    1. John A. Tatom, 1990. "The P-star approach to the link between money and prices," Working Papers 1990-008, Federal Reserve Bank of St. Louis.
    2. John A. Tatom, 1990. "The link between monetary aggregates and prices," Working Papers 1990-002, Federal Reserve Bank of St. Louis.
    3. Tobias F. Rötheli, 1990. "Money Supply and Money Demand Determinants of Swiss Inflation," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 126(I), pages 1-15, March.

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