Inflation Persistence, Backward-Looking Firms, and Monetary Policy in an Input-Output Economy

The main purpose of this chapter is to investigate monetary policy dynamics, as well as the inflation inertia and inflation persistence in Romania using a DSGE approach. The empirical findings revealed that the price evolution reflects the difficulties of eliminating the inflation inertia. Moreover, in Romania, the historic inflation evolution has a significant influence in terms of inflation expectation patterns. Inflation is a negative phenomenon with dramatic consequences for Romania's economic development on long term.

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Sectoral inflation persistence and optimal monetary policy

Journal of Macroeconomics ◽

10.1016/j.jmacro.2020.103215 ◽

2020 ◽

Vol 65 ◽

pp. 103215

Author(s):

Daisuke Ida

Keyword(s):

Monetary Policy ◽

Optimal Monetary Policy ◽

Inflation Persistence

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Input–output interactions and optimal monetary policy

Journal of Economic Dynamics and Control ◽

10.1016/j.jedc.2011.04.015 ◽

2011 ◽

Vol 35 (11) ◽

pp. 1817-1830 ◽

Cited By ~ 17

Author(s):

Ivan Petrella ◽

Emiliano Santoro

Keyword(s):

Monetary Policy ◽

Optimal Monetary Policy ◽

Input Output

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TRANSMISSION OF MONETARY POLICY SHOCKS: DO INPUT–OUTPUT INTERACTIONS MATTER?

Macroeconomic Dynamics ◽

10.1017/s1365100519000038 ◽

2019 ◽

Vol 24 (8) ◽

pp. 1881-1903

Author(s):

Aarti Singh ◽

Stefano Tornielli Di Crestvolant

Keyword(s):

Monetary Policy ◽

Spillover Effects ◽

Intermediate Goods ◽

Input Output ◽

Monetary Policy Shocks ◽

Vector Autoregressive ◽

Policy Shocks ◽

Monetary Policy Shock ◽

New Evidence ◽

Transmission Of Monetary Policy

We examine whether input–output interactions among industries impact the transmission of monetary policy shocks through the economy. Using vector autoregressive (VAR) methods we find evidence of heterogeneity in the output response to a monetary policy shock in both finished goods industries and intermediate goods industries. While output responses in finished goods industries can be related to heterogeneity in industry characteristics, this relationship is not so obvious for intermediate goods industries. For the intermediate goods industries in our sample, we find new evidence of demand-spillover effects that impact the transmission of monetary policy via input–output linkages.

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