Annual Inflation Research Articles

Granular inflation spillovers

PurposeThe authors test the granularity hypothesis to international inflation spillovers using annual exports and inflation data for 138 countries from 1991 to 2020. This study aims to discuss the aforementioned objective.Design/methodology/approachFirst, the authors quantify the power law for the right tail of the export volumes distribution and discuss its implications. Then, the authors compute the granular residual, a measure of shocks to the largest countries.FindingsThe authors find export volumes across countries are not Gaussian-distributed but follow a power law. This finding means the largest countries disproportionately impact world inflation. In addition, the authors find that countries with higher relative weight in international trade determine a portion of international spillovers greater than their trade share. Moreover, eight big grains are responsible for the bulk of inflation spillovers.Practical implicationsThe policy implication is that other countries' central banks should closely monitor the eight big grains when conducting their domestic monetary policy.Originality/valueThis is the first study spotting the problem of granular inflation spillovers.

The Evolution of Public Debt, Gross Domestic Product and Inflation Rate in Poland in 2015-2021

The research aimed to assess the amount of public debt, GDP, and inflation in Poland and to forecast it for the period 2022-2026. The amount of public debt in the years under study, and two macroeconomic measures, GDP and inflation, were analyzed. The research was conducted based on data obtained from the Central Statistical Office, the Ministry of Finance, and Eurostat. One of the main research objectives of the study was to find a relationship between the level of GDP and public debt. To this end, vertical analysis of the acquired data was carried out and Pearson linear correlation coefficients were calculated. Another important aspect addressed in the study was the magnitude of average annual inflation rates, compared to the volume of public debt. To this end, the focus was on carrying out a vertical analysis of the variables that made it possible to find relationships between inflation and public debt. The focus was also on examining the share of public debt in GDP for Poland related to selected EU member states. The analysis was carried out in three countries each with a high and low correlation of the indicator under study. The analysis carried out allowed for the confirmation of the hypotheses put forward in this study that public debt is correlated with both GDP and the level of inflation in Poland. The estimated forecasts made it possible to conclude that the public debt will gradually increase over the next 5 years.

Techno-economic assessment on a multi-stage compressed carbon dioxide energy storage system with liquid storage

Energy storage system is capable of solving the intermittent and volatility problems of renewable energy and can also perform peak-shaving and valley-filling of the grid. A compressed gas energy storage by storing liquid carbon dioxide possesses the merits of high energy density and competitive efficiency, which makes it a promising overground energy storage technology. However, the problems this technology faced with are narrow compression/expansion processes, high storage pressure and liquefying the gaseous carbon dioxide. Therefore, a liquid carbon dioxide storage system with low-pressure storage and extended working process is suggested in this work. Furthermore, a comprehensive evaluation is conducted on the system from both thermodynamic and economic aspects. The effects of charge and discharge pressures, CO2 mass flow ratio, system operation years, annual cycle times, discount rate, inflation rate and electricity price in different cities on system performance are analyzed. The results indicate that by increasing the charge and discharge pressures there is a maximum round trip efficiency of 56.23% and a peak energy density of 19.90 kWh/m3, respectively. In addition, the analysis of the electricity prices in four different cities on the economic action over the system shows that Shenzhen has the lowest levelized cost of energy (0.0907 $/kWh), Beijing can obtain the highest net present value of 35.314 million dollars and complete cost recovery in the shortest time of 4.84 years.

Economic Activity Forecasting Based on the Sentiment Analysis of News

The outbreak of war and the earlier and ongoing COVID-19 pandemic determined the need for real-time monitoring of economic activity. The economic activity of a country can be defined in different ways. Most often, the country’s economic activity is characterized by various indicators such as the gross domestic product, the level of employment or unemployment of the population, the price level in the country, inflation, and other frequently used economic indicators. The most popular were the gross domestic product (GDP) and industrial production. However, such traditional tools have started to decline in modern times (as the timely knowledge of information becomes a critical factor in decision making in a rapidly changing environment) as they are published with significant delays. This work aims to use the information in the Lithuanian mass media and machine learning methods to assess whether these data can be used to assess economic activity. The aim of using these data is to determine the correlation between the usual indicators of economic activity assessment and media sentiments and to forecast traditional indicators. When evaluating consumer confidence, it is observed that the forecasting of this economic activity indicator is better based on the general index of negative sentiment (comparisons with univariate time series). In this case, the average absolute percentage error is 1.3% lower. However, if all sentiments are included in the forecasting instead of the best one, the forecasting is worse and in this case the MAPE is 5.9% higher. It is noticeable that forecasting the monthly and annual inflation rate is thus best when the overall negative sentiment is used. The MAPE of the monthly inflation rate is as much as8.5% lower, while the MAPE of the annual inflation rate is 1.5% lower.

Forecasting inflation and output growth with credit‐card‐augmented Divisia monetary aggregates

AbstractThis paper investigates the performance of the credit‐card‐augmented Divisia monetary aggregates in forecasting US inflation and output growth at the 12‐month horizon. We compute recursive and rolling out‐of‐sample forecasts using an autoregressive distributed lag model based on Divisia monetary aggregates. We use the three available versions of those monetary aggregate indices, including the original Divisia aggregates, the credit card‐augmented Divisia, and the credit‐card‐augmented Divisia inside money aggregates. The source of each is the Center for Financial Stability. We find that the smallest root mean square forecast errors are attained with the credit‐card‐augmented Divisia indices used as the forecast indicators. We also consider Bayesian vector autoregression for forecasting annual inflation and output growth.

Antecedents and Mediators for Building and Integrated Research Framework towards Successful Brand Revitalisation

The true identity of brands fades with changes in the market environment. Growing concerns regarding the decline of long-established brands have caught the attention of academicians and practitioners both. There is undivided attention witnessed in literature to develop a research framework to identify antecedents and intervening factors and their impact on Brand Revitalization. The primary aim of the study is to categorise identified variables into different approaches and integrate intervening variables to propose a research framework for empirical validation. Based on the systematic literature review approach, 93 studies from more than three decades (1984 to 2021) were undertaken after applying inclusion and exclusion criteria. 62 per cent of qualitative research and 27 per cent of empirical and mixed research papers were obtained. A total of 63 variables from 18 empirical studies were categorised into two approaches ‘Brand re-enchantment’ and ‘Brand modernity’, which significantly influenced brand revitalisation. 9 mediators and 12 moderators were obtained from which ‘Advertising’ was introduced as a mediator for effective brand revitalisation. The research paper provides a scope to empirically validate the proposed research framework in different sectors and industries to carry the domain of brand revitalisation to an advance level.Implications for Central European audience: According to Eurostat , the Annual inflation rate in the Euro Area increased from 4.1% in 2021 to 8.9% in 2022. Price has been accelerated for food, beverages, industrial goods and services. This has declined the purchasing power of consumers while making goods and services more expensive. As a result, demand-side is slowing down and consumers are shifting to low or no-frills brands making it challenging for brands to capture the likely brand decline. However, mature or declining brands often enjoy strong brand equity and there is residual salience which can be leveraged to retain existing consumers. The study offers guidelines to recognize the acute and latent signs of brand decline and provide possible revitalization strategies to increase market share, aid in internationalization, and strengthen the perceived brand image of Central European brands. Advertising illustrates the brand’s features, benefits, and uses, which may help in conveying the desired image of brands to the audience of central European countries.

Housing Rents and Inflation Rates

AbstractThis paper develops a quality‐adjusted measure of marginal housing rents using a monthly statistic of landlord net rental income. The marginal rent index (MRI) exhibits deflation during recessions and leads the official rent index by 7 months. The modified inflation rate based on MRI suggests that the annual official inflation rate was overestimated by 1.7–4.1% during the Great Recession but underestimated by 0.3–0.7% during the subsequent expansionary period.

Length of Hospital Stay, Hospitalization Costs, and Their Drivers in Adults with Diabetes in the Romanian Public Hospital System.

The aim of this analysis was to assess the costs associated with the hospitalizations of persons with diabetes in a Romanian public hospital. We performed a retrospective “top-down” cost analysis of all adult patients discharged from a tertiary care hospital with an ICD-10 primary or secondary code of diabetes mellitus (type 1, type 2, or specific forms) between 1 January 2015 and 31 December 2018. All costs were adjusted with the annual inflation rates and converted to EUR. We included 16,868 patients with diabetes and 28,055 episodes of hospitalization. The total adjusted hospitalization cost in the analyzed period was EUR 26,418,126.8 and the adjusted median cost/episode of hospitalization was EUR 596.5. The mean length of a hospital stay/episode was 7.3 days. In the multivariate regression analysis, higher adjusted average costs/episodes of hospitalization and longer lengths of hospital stays were associated with increasing age, the presence of cardiovascular diseases, chronic kidney disease, and foot ulcerations. Moreover, a significant association between the average cost/episode of hospitalization and the length of hospital stay was observed (β = 0.704, p < 0.001). This study shows the burden on Romanian public hospitals of inpatient diabetes care and the main drivers of the costs.

AN AUTO-REGRESSIVE INTEGRATED MOVING AVERAGE MODEL OF INFLATION IN MOLDOVA WITH SOME OBSERVATIONS ON THE INFLATION OUTLOOK

The paper discusses the properties of Auto-Regressive Integrated Moving Average (ARIMA) models and proceeds to estimate a model for the monthly evolution of the annual inflation rate in Moldova from January 2013 to October 2021. The aim of the paper is to develop a model relying exclusively upon the historical evolution of inflation as an additional instrument for forecasting purposes. The estimated model explains close to 97 % of the monthly variation of the inflation rate over the model’s estimation period and is used to generate forecasts of the monthly evolution of the annual inflation rate in short to medium term. The ARIMA-generated forecasts suggest that the acceleration of inflation which characterised the monthly evolution of the annual inflation rate in 2021 up to October 2021 will continue in the next four months, with the inflation rate peaking at 12 % in February 2022 and slowly decelerating from that point onwards towards the 5 % inflation target in the longer term. The paper concludes by suggesting areas for further work and briefly discussing the inflation outlook for the Moldovan economy, considering current international and domestic economic conditions. Natural areas for further work would be to regularly update the econometric estimates and forecasts of the estimated ARIMA model as the economy evolves through time. With regard to the inflation outlook, the analysis contained in the concluding section of the paper suggests that the future evolution of inflation is likely to be more pessimistic than the ARIMA-based generated forecast.

Construction of Inflation Forecasting Model Based on Ensemble Empirical Mode Decomposition and Bayesian Model

The high explanatory power of the first-order lag term of inflation in the inflation explanatory factor is that, on the one hand, the calculation of annual inflation indicators makes the inflation values of adjacent months cover the high correlation caused by the common price increase, and on the other hand, it also shows that people’s perception of inflation is high. Some adaptability is expected. Although there are many Bayesian models available, due to the limitation of high-dimensional characteristics of the economy, most of the current inflation forecasting researches focus on a variety of generalized naive Bayesian models. By summarizing and analyzing the structural characteristics, learning methods, and classification principles of different Bayesian models, this paper finds out the important factors that affect the performance of the models and provides a theoretical basis for further improving the performance of Bayesian inflation forecasting. In this paper, the empirical mode decomposition method is introduced into inflation forecasting, and EEMD has obvious advantages in dealing with nonstationary and nonlinear time series and can decompose the signal according to the time scale characteristics of the data itself. Decompose the original time series step by step to generate eigenmode functions with different time scales. It is divided into high-frequency sequence and low-frequency sequence. Use rolling method and iterative method to construct subsamples for the sample data in this sample interval, forecast the inflation rate of each subsample interval in the next 12 months, and then compare the predicted value with the actual value to obtain a certain constructive conclusion. The predicted value is relatively close to the real value, which has theoretical and practical significance, and the predicted results obtained have no obvious regularity, but the root mean square error can be kept within 60%. By comparing the predicted value and the actual value, it can be seen that the prediction effect of the EEMD model is better.

Using the Retail Distribution of Sellers to Impute Expenditure Shares

Many price indices must be constructed without quantity data at the elementary level. The paper shows that for some consumer goods in the United States and other countries, one can approximate expenditure shares using weights derived from the retail distribution of sellers. These weights are based on the share of outlets selling an item, or the share of outlets adjusted by the total number of items sold in each. Relative to using no weights, the paper finds that using such imputed weights substantially reduces bias in the frequency of price changes, in annual inflation, and in price comparisons across countries. (JEL E31, L11, L81, O11, O14)

MONEY SUPPLY, INFLATION AND ECONOMIC GROWTH IN BOSNIA AND HERZEGOVINA: AN EMPIRICAL ANALYSIS

The analysis of monetary variables and their impact on the economic growth rate has always been in the focus of economic research. In the broadest sense, economic theory distinguishes two basic views defined by the views of monetarists and Keynesians. Although the basic difference is reflected in the determination of price rigidity and money neutrality, specifics of modern economic systems shift the focus towards the positive influence of monetary on real variables. The aim of our research is to identify and quantify the impact of monetary variables on economic growth in Bosnia and Herzegovina. The research was conducted using data from the period 2000-2020. The paper starts with the hypothesis that money supply and inflation ultimately have a positive impact on the real economic growth in BiH. The money supply M2 and the annual inflation rate are taken as explanatory (monetary) variables in the research, while real growth is a dependent variable. The long-term relationship between monetary variables and real growth rates was tested, taking into account the specificity of the BiH monetary arrangement established in the form of a currency board. In order to prove the hypothesis, we applied econometric techniques such as VEC model, cointegration analysis, innovation analysis based on the impulse-responsive function, decomposition variance as well as a causality test. The research results showed the connection between the money supply and the inflation rate with the economic growth in BiH, the relation being positive and statistically significant in the long run. With this, we confirmed the initial hypothesis of the work.

Determinants of Non-Performing Loans: Evidence from Sri Lanka

Purpose: The increasing trend of non-performing loans in Sri Lanka threatens the banking system. This study attempts to identify the determinants of non-performing loans in licensed commercial banks in Sri Lanka to fill the void in the finance research arena. Methodology: This study is carried out with a sample of eight licensed commercial banks using macroeconomic factors and bank-specific factors: the real interest rate, annual GDP growth rate, annual inflation rate, exchange rate, unemployment rate, the efficiency of the bank, bank size, lending rate, and ROA. Financial data were analyzed for the period of 2008-2018 using panel data regression analysis. Findings: Results show that GDP growth rate, Exchange rate, Unemployment rate, inflation rate, and bank size have a significant effect on non-performing loans in the Sri Lankan banking industry. However, bank efficiency and return on asset (ROA) do not significantly correlate with NPLs. Among these relationships, only the exchange rate shows a positive relationship with the NPL, whereas all other variables show a negative relationship. Implications: According to the study's findings, it is recommended that Sri Lankan commercial banks have their focal point on credit risk management based on maximizing return on its assets while keeping its non-performing loans within acceptable limits.

Optimization and comparison of multiple solar energy systems for public sanitation service buildings in Tibet

Qinghai Tibet Plateau, known as ‘Roof of the World’, is the highest and largest plateau on Earth, with an average elevation of 4900 m and spanning nearly two-thirds the size of the European continent. The energy consumption characteristics of public sanitation service buildings in the Qinghai Tibet Plateau are significantly different from traditional public buildings. It has unique advantages that allow these facilities to use the local enriched solar energy resources to meet the energy demand. This study proposes eight potential solar energy system schemes to obtain a suitable solar energy supply system and design an optimization method for public sanitation service buildings. The optimization models aimed at the life cycle cost for each solar energy system are established, and the equipment capacity in the system is optimized and simulated. Firstly, the optimized life cycle cost and equipment capacity of different solar energy system are compared and analyzed. Then, the short-term dynamic operation performance and the system's energy conservation, economic and CO2 emission reduction performance are comprehensively analyzed. Finally, the sensitivities of economic parameters and equipment price to the system optimization results are analyzed. The results indicate that the life cycle cost of the integrated solar hot water and heat storage system is 43% lower than that of the standalone solar hot air heat supply system and the standalone photovoltaic system. An optimized integrated system consisting of photovoltaic, photothermal, thermal storage, and power storage has the best comprehensive performance. The annual energy saving ratio of the integrated system is ∼85%, and the life cycle cost saving rate is about 50%. In addition, the sensitivity analysis shows that the electricity price is the most significant factor for life cycle cost compared to the annual interest and inflation rates. The price of a solar collector and air source heat pump have the most significant impact on the life cycle cost optimization results of a photovoltaic-photothermal-thermal and power storage integrated system.

Proxy SVAR identification of monetary policy shocks - Monte Carlo evidence and insights for the US

In empirical macroeconomics, proxy structural vector autoregressive models (SVARs) have become a prominent path towards detecting monetary policy (MP) shocks. However, in practice, the merits of proxy SVARs depend on the relevance and exogeneity of the instrumental information employed. Our Monte Carlo analysis sheds light on the performance of proxy SVARs under realistic scenarios of low relative signal strength attached to MP shocks and alternative assumptions on instrument accuracy. In an empirical application with US data we argue in favor of the specific informational content of instruments based on the dynamic stochastic general equilibrium model of Smets and Wouters (2007). A joint assessment of the benchmark proxy SVAR and the outcomes of a structural covariance change model implies that from 1973 until 1979 monetary policy contributed on average between 2.2 and 2.4 percent of annual inflation. For the so-called Volcker disinflation starting in 1979Q4, the benchmark structural model shows that the Fed’s policy measures effectively reduced the GDP deflator within three years (i.e. by -12.26 pp until 1982Q3).

A Generalized New Keynesian Model with Wage Stickiness

In this paper, we derive a generalized version of New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model to study how real imperfections of labor market affect the steady state and dynamics of model given different non-zero annual target inflation rates. The main finding is that, given the same target inflation rate, wage stickiness is more distortionary than the price stickiness. The existence of positive target inflation rate can also change the first-order dynamics of model, amplifying or reducing the dynamic response of model according to the type of exogenous shocks. A relatively high target inflation rate, 2% or 3%, may be preferable to a zero target inflation rate.

ANALYSIS OF INFLATION CONVERGENCE IN THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS) ZONE (1987-2021)

This study examines the convergence of inflation (country annual average inflation rate) through it determinants vis-?-vis the set convergence criteria in the Economic Community of West African States during the period 1987-2020. The study adopted ex-post factor design in order to answer the research questions. The study undertook unit root test employing Levin, Lin, and Chu (LLC) panel unit root method to check the stationarity of the variables, Auto Regressive Distributed Lag (ARDL) model and Error Correction Model (ECM) to determine whether or not they are co-integrated and a dynamic fixed effect panel data model covering 15 countries over the period under review. The study found that while West African Economic Monetary Union (WAEMU) countries inflation rates fall below the threshold, West African Monetary Zone (WAMZ) inflation rates are beyond the ECOWAS inflation convergence rate of less than or equal to 5 percent, that cross?country differences in inflation rates are attributed to the variation of the output gap, the increase in liquidity, the variation of exchange and interest rates, and the persistent increase in the price level. In the view of targeting the five percent (5 %) percent convergence criterion, the study recommended that Changes of traditional country monetary approaches to a supra-national monetary authority that compels compliance to a regional monetary and inflation targets, stimulation of economic growth, lowering of interest rates as well as adoption of a strong and efficient exchange rate mechanism becomes imperative for the ECOWAS member states

Direct and indirect costs for hospitalized patients with dengue in Southern Sri Lanka

BackgroundThe Southern Province of Sri Lanka is endemic with dengue, with frequent outbreaks and occurrence of severe disease. However, the economic burden of dengue is poorly quantified. Therefore, we conducted a cost analysis to assess the direct and indirect costs associated with hospitalized patients with dengue to households and to the public healthcare system.MethodsFrom June 2017–December 2018, we prospectively enrolled children and adults with acute dengue hospitalized at the largest, public tertiary-care (1800 bed) hospital in the Southern Province, Sri Lanka. We administered a structured questionnaire to obtain information regarding direct costs spent by households on medical visits, medications, laboratory testing, and travel for seeking care for the illness. Indirect costs lost by households were estimated by identifying the days of work lost by patients and caregivers and school days lost by children. Direct hospital costs were estimated using gross costing approach and adjusted by multiplying by annual inflation rates in Sri Lankan rupees and converted to US dollars.ResultsA total of 1064 patients with laboratory-confirmed dengue were enrolled. The mean age (SD) was 35.9 years (15.6) with male predominance (66.2%). The mean durations of hospitalization for adults and paediatric patients were 3.86 (SD = 1.51) and 4 (SD = 1.32) days, respectively. The per-capita direct cost borne by the healthcare system was 233.76 USD, and was approximately 14 times greater than the per-capita direct cost borne by households (16.29 USD, SD = 14.02). The per-capita average number of loss of working days was 21.51 (SD = 41.71), with mean per-capita loss of income due to loss of work being 303.99 USD (SD = 569.77), accounting for over 70% of average monthly income. On average, 10.88 days (SD = 10.97) of school days were missed due to the dengue episode. School misses were expected to reduce future annual income of affected children by 0.44%.ConclusionsDengue requiring hospitalization had a substantial economic burden on the public healthcare system in Sri Lanka and the affected households. These findings emphasize the importance of strengthening dengue control activities and improved use of hospital-based resources for care to reduce the economic impact of dengue in Sri Lanka.

Modelling the Effect of Macro-economic Variables on Pension Contribution in Nigeria

In recent years, the performance of pension contribution funds administrators in Nigeria has been rated as unsatisfactory, negatively impacting the ambitions of retirees. The broad view is that changes in a few macroeconomic variables, such as the foreign exchange rate, annual inflation rate, savings deposit rate, and GDP (income), must have played a role in this issue. As a result, the purpose of this study is to look at the impact of these variables on the pension contribution funds. The research was conducted in Nigeria, and annual data sets on pension contributions and other macroeconomic factors were acquired for the years 2004 through 2020.&#x0D; The long and short run dynamics of some macroeconomic variables and pension contribution were analyzed using the Auto-regressive Distributed Lag method. The analysis demonstrates a positive and significant association between exchange rate and pension contributions in both the long and short run. Similarly, inflation rate demonstrates a negative and statistically significant link with pension contributions in both the long and short run. The results also show that the Error Correction Model (ECM) coefficient has the correct sign: negative, less than one, and statistically significant which means that, the system will correct itself at a rate of 38 percent from the short to the long run. The study concludes that there should be concerted efforts by the government to curve the excessive inflation rate down, deposit rate should be monitored and always relate it to pensioners fund in order to maintain its financial sustainability.

FUNDAMENTAL &amp; TECHNICAL ANALYSIS ON SELECTED SECTORS

The annual inflation rate was 6.18% in 2020 from a downwardly revised 3.72% in the previous year. With the inflation rate higher than the average interest rate offered by the Indian Banks on the savings account being on an average 3.5 to 4%, Indians have started investing their money in equity or mutual funds. With more number of people aware about the equity market, and with constant encouragement by SEBI and GOI for educating people about the different avenues of investment, people have started considering investing in the stock market. The traditional investors today still focus more on Fixed Deposits and PPFs. But gradually, people have started being more aware about the stock market. To minimize the effect of risk various models and theories have been formulated. The two primary methods used to analyze the risk and the volatility of the market are: Fundamental &amp; Technical Analysis. Secondary data from Money Control and many other sites is used for fundamental &amp; technical analysis of 10companies from 5 different sectors (IT, Banking, Automobile, Health and Infrastructure). From research view point, the importance of fundamental &amp; technical analysis in investment decisions can be observed and the sectors can be ranked according to their performance as well as investor preference.