Inflation Forecast Targeting in a Low-Income Country

2018 ◽  
Author(s):  
Ali Alichi ◽  
Marshall Mills ◽  
Douglas Laxton ◽  
Hans Weisfeld
Keyword(s):  
Low Income ◽  
Inflation Targeting ◽  
Low Income Country ◽  
Long Run ◽  
High Inflation ◽  
The Interest Rate ◽  
Optimal Approach ◽  
Inflation Variability ◽  
Model Features

A model in which monetary policy pursues fully fledged inflation targeting is adapted to Ghana. Model features include: endogenous policy credibility; non-linearities in the inflation process; and a policy loss function that aims to minimize the variability of output and the interest rate, as well as deviations of inflation from the long-term low-inflation target. The optimal approach from initial high inflation to the ultimate target is gradual; and transitional inflation-reduction objectives are flexible. Over time, as policy earns credibility, expectations of inflation converge towards the long-run target, the output-inflation variability trade-off improves, and optimal policy responses to shocks moderate.

scholarly journals Influence of inflation on long-term economic growth in the context of the raw material orientation of the national economy

2020 ◽  
Vol 159 ◽  
pp. 06003
Author(s):  
Aizhan Omarova ◽  
Zhanar Oralbaeva ◽  
Assel Turlybekova ◽  
Assiya Marat
Keyword(s):  
Economic Growth ◽  
Inflation Targeting ◽  
Functional Dependence ◽  
Policy Instruments ◽  
Raw Material ◽  
Strategic Decisions ◽  
Material Orientation ◽  
High Inflation ◽  
The Cost

In modern conditions for Kazakhstan, it becomes important to choose a development model that would be the most optimal and effective. When developing a model of economic policy, special attention should be paid to the choice of a system of indicators that could adequately describe macroeconomic processes as a whole and their interconnections. At the same time, economists argue that the implementation of the model approach can become the basis for strategic decisions only in a stable economic situation and when in the period under review the change in the cost structure of GDP is not distorted by high inflation. Therefore, in modern conditions of economic development, in our opinion, it is of interest to study the relationship between economic growth and the level of current and threshold inflation. This study substantiates the role of the threshold inflation level and proposes an equation of the functional dependence of this indicator on the main economic indicators. The necessary conditions for the implementation of the inflation targeting regime are disclosed. It is concluded that in conditions of commodity dependence, new effective monetary policy instruments are required.

scholarly journals What Do Data on Millions of U.S. Workers Reveal About Lifecycle Earnings Dynamics?

Econometrica ◽  
2021 ◽  
Vol 89 (5) ◽  
pp. 2303-2339 ◽  
Author(s):  
Fatih Guvenen ◽  
Fatih Karahan ◽  
Serdar Ozkan ◽  
Jae Song
Keyword(s):  
Low Income ◽  
Impulse Response Functions ◽  
Normal Mixture ◽  
Earnings Dynamics ◽  
State Dependent ◽  
Long Run ◽  
Negative Skewness ◽  
Substantial Heterogeneity ◽  
Very High

We study individual male earnings dynamics over the life cycle using panel data on millions of U.S. workers. Using nonparametric methods, we first show that the distribution of earnings changes exhibits substantial deviations from lognormality, such as negative skewness and very high kurtosis. Further, the extent of these nonnormalities varies significantly with age and earnings level, peaking around age 50 and between the 70th and 90th percentiles of the earnings distribution. Second, we estimate nonparametric impulse response functions and find important asymmetries: Positive changes for high‐income individuals are quite transitory, whereas negative ones are very persistent; the opposite is true for low‐income individuals. Third, we turn to long‐run outcomes and find substantial heterogeneity in the cumulative growth rates of earnings and the total number of years individuals spend nonemployed between ages 25 and 55. Finally, by targeting these rich sets of moments, we estimate stochastic processes for earnings that range from the simple to the complex. Our preferred specification features normal mixture innovations to both persistent and transitory components and includes state‐dependent long‐term nonemployment shocks with a realization probability that varies with age and earnings.

scholarly journals Adopting Inflation Targeting in Pakistan: An Empirical Analysis

2010 ◽  
Vol 15 (2) ◽  
pp. 51-76 ◽  
Author(s):  
Nadia Saleem
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Inflation Rate ◽  
Policy Option ◽  
Price Stability ◽  
Potential Candidate ◽  
Long Run ◽  
The Interest Rate ◽  
Nominal Anchor

The objective of this paper is to assess the conditions for inflation targeting in Pakistan. The recent inflationary surge in Pakistan calls for rethinking monetary policy afresh. This paper argues the case for inflation targeting in Pakistan as a policy option to achieve price stability. The country experienced an inflation rate of just below 10 percent during 1970-2009, which makes it a potential candidate for inflation targeting. Applying the VAR technique to data for the same period, inflation is shown to be adaptive in nature, leading us to reject the accelerationist hypothesis. The Lucas critique holds as people are found to use forward-looking models in forming expectations about inflation. The paper also sheds some light on the State Bank of Pakistan’s level of preparedness for the possibility of adopting inflation targeting, for which transparency and autonomy are prerequisites. The interest rate channel can play the role of a nominal anchor in the long run.

scholarly journals Does Inflation Targeting Anchor Long-Run Inflation Expectations? Evidence from Long-Term Bond Yields in the U.S., U.K., and Sweden

2006 ◽  
pp. 1.000-51.000 ◽  
Author(s):  
Refet S. Gürkaynak ◽  
◽  
Andrew T. Levin ◽  
Eric T. Swanson ◽  
◽  
...  
Keyword(s):  
Inflation Targeting ◽  
Inflation Expectations ◽  
Bond Yields ◽  
Long Run ◽  
The U.S

Does tourism activity reduce the size of the informal economy? Capturing long-term heterogeneous linkages around the world

2021 ◽  
pp. 135481662110498
Author(s):  
Aldo Salinas ◽  
Cristian Ortiz ◽  
Pablo Ponce ◽  
Javier Changoluisa
Keyword(s):  
Low Income ◽  
Informal Economy ◽  
Least Square ◽  
Low Income Countries ◽  
Global Level ◽  
Causality Test ◽  
Country Group ◽  
Long Run ◽  
Tourism Activity

This paper investigates the long-term and causal relationship between tourism activity and the informal economy in 76 countries from 1995 to 2015. We explore this relationship at the global level and by country group, using panel, co-integration techniques that indicate the existence of a long-run co-integration relationship between tourism and informal economy for the whole sample and at the level of country groups. Additionally, the paper analyzes the long-run coefficients of the model by using fully modified ordinary least square regressions (FMOLS). The results from FMOLS evidence a negative and significant impact of tourism on the informal economy at the global level and in high, upper-middle, and lower-middle income countries, but a positive link in low-income countries. However, the results reveal a heterogeneous long-run relationship within country groups. Also, the result of the Dumitrescu-Hurlin Granger causality test indicates bidirectional causality in the global sample, but the direction of causality varies by country group. The main policy implication derived from our findings suggests that in order to reduce the size of informal economy, policy-makers should foster tourism activities. JEL Classification : J01, L83, C23, O57, C00, C01

THE ROLE OF TWO INTEREST RATES IN THE INTERTEMPORAL CURRENT ACCOUNT MODEL

2012 ◽  
Vol 16 (S2) ◽  
pp. 176-189 ◽  
Author(s):  
Michał Rubaszek
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Current Account ◽  
Low Income ◽  
Developing Economies ◽  
Low Income Country ◽  
Interest Rate Spread ◽  
The Interest Rate ◽  
The Current Account

We analyze the role of the lending-deposit interest rate spread in the dynamics of the current account in developing countries. For that purpose, we extend the standard perfect-foresight intertemporal model of the current account for the existence of the interest rate spread and simulate the convergence path of developing economies. This model helps explain why in many cases it is optimal for a fast-growing, low-income country to run a balanced current account.

scholarly journals Analisis Faktor-Faktor yang Mempengaruhi Nilai Tukar Rupiah Periode 1999Q1-2019Q2

2020 ◽  
Vol 11 (2) ◽  
pp. 197-209
Author(s):  
Erric Wijaya
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Interest Rates ◽  
Inflation Rate ◽  
Oil Prices ◽  
Short Term ◽  
Long Run ◽  
The Exchange Rate ◽  
The Interest Rate

The exchange rate plays an important role in influencing the level of Indonesia's international trade towards trading partner countries. This study discusses the factors that influence the exchange rate of the rupiah against dollar both in the short and long term. The variables that are suspected to influence changes in exchange rates are the inflation rate, the interest rate (SBI), world oil prices, the value of exports, and the value of imports. This research was conducted during 1999 quarter 1 to 2019 quarter 2. The results showed that there was a long-term and short-term relationship between inflation rates, interest rates, world oil prices, exports and imports to the exchange rate. In the short term, the interest rate and world oil prices have a significant effect on the exchange rate. In the long run, the inflation rate, world oil prices and imports have a significant effect on the exchange rate.

The long-run interrelationship between exchange rate and interest rate: the case of Mexico

2019 ◽  
Vol 46 (7) ◽  
pp. 1380-1397 ◽  
Author(s):  
Salvatore Capasso ◽  
Oreste Napolitano ◽  
Ana Laura Viveros Jiménez
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Real Exchange Rate ◽  
Real Interest Rate ◽  
Content Type ◽  
Long Run ◽  
Monetary Authorities ◽  
The Exchange Rate ◽  
The Interest Rate

Purpose The purpose of this paper is to analyse the long-term nature of the interrelationship between interest rate and exchange rate. Design/methodology/approach By employing Mexican data, the authors estimate a non-linear autoregressive distributed lags (NARDL) model to investigate the nature of the changes and the interaction between interest rate and exchange rate in response to monetary authorities’ actions. Findings The results show that, contrary to simplistic predictions, the real exchange rate causes the real interest rate in an asymmetric way. The bounds testing approach of the NARDL models suggests the presence of co-integration among the variables and the exchange rate variations appear to have significant long-run effects on the interest rate. Most importantly, these effects are asymmetric and positive variations in the exchange rate have a lower impact on the interest rate. It is also interesting to report that the reverse is not true: the interest rate in the long-run exerts no statistical significant impact on the exchange rate. Practical implications The asymmetric long-term relationship between real exchange rate and real interest rate is evidence of why monetary authorities are reluctant to free float exchange rate. In Mexico, as in most developing countries, monetary policy strongly responds to exchange rate movements because these have relevant effects on commercial trade. Moreover, in dollarized economies these effects are stronger because of pass-through impacts to inflation, income distribution and balance-sheet equilibrium (the well-known “original sin”). Originality/value Under inflation targeting and flexible exchange rate regime, despite central banks pursue the control of short-term interest rate, in the long-run one could observe that it is the exchange rate that influences the interest rate, and that this reverse causality is stronger in emerging economies. This paper contributes by analysing the asymmetric relationship between the variables.

Optimal Monetary Policy

1998 ◽  
Vol 164 ◽  
pp. 100-109 ◽  
Author(s):  
Andrew P. Blake ◽  
Martin Weale ◽  
Garry Young
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Policy Design ◽  
Policy Framework ◽  
Optimal Monetary Policy ◽  
Long Run ◽  
Short Run ◽  
The Interest Rate ◽  
Feedback Rule ◽  
Simple Feedback

In this article we propose a policy framework for inflation targeting that contains elements of both optimal and simple rules. We use a simple feedback rule for the interest rate to look after monetary policy in the long run whilst using optimal control in the short run to determine appropriate responses to shocks. The composite policy is capable of substantial welfare improvements over using a simple rule alone whilst maintaining tractability. We see the use of such a framework together with a fully specified model as a feasible approach to practical policy design.

scholarly journals Buccal mucosal graft urethroplasty for anterior urethral stricture, experience from a low-income country

BMC Urology ◽  
2021 ◽  
Vol 21 (1) ◽  
Author(s):  
Sami Mahjoub Taha Awad ◽  
Musab Abdalla M. Ahmed ◽  
Yassin Mohamed Osman Abdalla ◽  
Mohammed El Imam M. Ahmed ◽  
Mohamed Daffalla-Awadalla Gismalla
Keyword(s):  
Success Rate ◽  
Urethral Stricture ◽  
Low Income ◽  
Late Complications ◽  
Limited Resources ◽  
Excellent Outcome ◽  
Low Income Country ◽  
Buccal Mucosal Graft ◽  
Review Management

Abstract Background/purpose This study was conducted to present our experience in urethral mucosal graft urethroplasty to repair urethral stricture, as the first experience in our context. Methods This is a prospective hospital-based study that had been designed to review management outcomes of buccal mucosal graft urethroplasty for anterior urethral stricture from January 2017 to January 2019. Results The total number of involved patients was 60. The success rate was found to be 90% (n = 54), while 6 (10%) had a recurrence of stricture. Pain and pain combined bleeding from internal suture lines were the only early complication encountered in 50 (83.3%) and 2 (3.3%) patients, respectively. late complications occurred as follows 14 (23.3%) patients had UTI, 12 (20%) had wound infections, 8 (13.3%) had changes in ejaculation, and decrease in intensity of orgasm, and 6 (10%) had erectile dysfunction. One of the long-term complications was graft diverticulum in one case and was treated conservatively (in ventral on lay BMG). Conclusion Improvement of the service in limited resources countries like Sudan and was reflected in the excellent outcome of BMG urethroplasty as treatment of anterior urethral stricture (success rate 90%).

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