On price level stability, real interest rates and core inflation
In: Modelling aspects of the inflation process and the monetary transmission mechanism in emerging market countries
The paper adresses several issues pertaining to the problem of monetary policy, inflation measurement, and relative prices. After some preliminary empirical analysis showing that the problem must be relevant we set out to conduct a mainly theoretical investigation. If the per period utility function is not homotheoretical counterpants, and their properties, including those that are calculated from them (such as real interest rates), must be interpreted with care. We examine the consequences of goods heterogeneity in the fremwork of a stochastic dynamic equlibrium model without a steady state. To solve the model we posit specific, though we think plausible, assumptions concerning fiscal policy in a small open economy. Conclusions are obtained with important policy implications to the effect that inflation variability may be tolareted, and that the correct meaning and interpretation of real interest rates may run counter to accepted ideas. Our general conclusion is tahat neglecting goods heterogeneity may grossly mislead policy makers and analysts in certain circumstances.
(This abstract was borrowed from another version of this item.)
|This chapter was published in: ||This item is provided by Bank for International Settlements in its series BIS Papers chapters with number
08-07.||Handle:|| RePEc:bis:bisbpc:08-07||Contact details of provider:|| Postal: |
Phone: (41) 61 - 280 80 80
Fax: (41) 61 - 280 91 00
Web page: http://www.bis.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barnabás Ferenczi & Sándor Valkovszky & János Vincze, 2000. "What are Consumer Price Statistics Good for?," MNB Working Papers 2000/5, Magyar Nemzeti Bank (the central bank of Hungary).
- Sándor Valkovszky & János Vincze, 2000.
"Estimates of and Problems with Core Inflation in Hungary,"
MNB Working Papers
2000/2, Magyar Nemzeti Bank (the central bank of Hungary).
- Sandor Valkovszky & Janos Vincze, 2001. "Estimates of and Problems with Core Inflation in Hungary," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 1(1), pages 69-99.
When requesting a correction, please mention this item's handle: RePEc:bis:bisbpc:08-07. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Beslmeisl)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.