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Title: Making the most of high inflation
Authors: Charemza, Wojciech
Makarova, S.
Shah, I.
First Published: 16-Mar-2015
Publisher: Taylor & Francis (Routledge)
Citation: Applied Economics (2015)
Abstract: The article examines the relationship between the real effects of inflation and its level in countries with frequent episodes of high inflation. The real effects are computed as asymmetric impulse responses of output to inflation separately for the regimes with different signs of the differences between the expected inflation and the predicted output-neutral inflation. It is found that, with the increase in inflation, such effects increase for the regime with the positive sign, relatively to the effects for the regime with the negative sign. It is also shown that this finding 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, in economies with frequent high inflation episodes, anti-inflationary monetary decisions are least damaging for output if undertaken in the periods when the difference between the expected and output-neutral inflation is negative.
DOI Link: 10.1080/00036846.2015.1021462
ISSN: 0003-6846
eISSN: 1466-4283
Version: Post-print
Status: Peer-reviewed
Type: Journal Article
Rights: Archived with reference to SHERPA/RoMEO and publisher website. The Version of Record of this manuscript has been published and is available in Applied Economics 16 March 2015
Appears in Collections:Published Articles, Dept. of Economics

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