Current Inflation Rate Research Articles

Arima Forecasting Model for Uganda’s Consumer Price Index

In Uganda, the Central Bank watches closely inflation which happens to be one of the key macroeconomic indicators for which the central bank rate is anchored on. Uganda Bureau of Statistics disseminates monthly Consumer Price Indices (CPIs) to the various stakeholders. Currently, the CPI is computed for eight urban centres spread across the country. The monthly CPIs serve mostly those users who require past and current inflation rates. The main objective of this study is to identify and estimate an ARIMA model for the CPI and use it to make short term forecasts. We relied upon monthly Consumer Price Indices from January 2010 to July 2020 obtained from Uganda Bureau of Statistics. The time series was transformed so as to make it stationary, before identification and estimation of ARIMA (p, d, q) x (P, D, Q)₁₂ models. An ARIMA (1, 1, 1) (0, 1, 1)₁₂ with no constant was selected as the best model, because it had the least AIC and BIC. Additionally, all the coefficients of the ARs and MAs were significant at 1% level. Using the selected model, inflation forecasts were generated for 12 months (August 2020 to July 2021) and found to fluctuate between 4.7 and 6 percent. We recommend this model to Uganda Bureau of Statistics and Central Bank to use it to make forecasts and disseminate them to users. In conclusion, generally good forecasts are vital for better resource allocation, planning and decision making.

Determinants of behavior of inflation rate in Nigeria

Inflation is an important macroeconomic issue that has continued to dominate discussions at major economic fora over time. Governments all over the world are concerned about its rising trend because of its pervasive effect on economic performance. One intriguing fact about inflation is that it is both the cause and effect of certain policy actions of government. Several studies have been conducted on the effect of inflation on economic activities in developing and developed nations, but studies on its cause, particularly in developing nations, are scant. This paper aims at identifying major factors that cause inflation in Nigeria. Based on the autoregressive distributed lag (ARDL) estimation method, the study shows empirical support for significant impact of external debt, exchange rate, fiscal deficits, money supply and economic growth on inflation. It further shows previous period or lagged inflation rate as a significant determinant of current inflation rate. However, the study produced no evidence of significant longrun impact of interest rate on the rate of inflation in Nigeria. The study recommends economic reforms that target foreign exchange inflow through increased export trade, as well as a paradigm shift away from deficit budgeting. There is also a need for infrastructural and institutional reforms to eliminate or, at least, minimize the impact of structural inequity on output prices.

Economic growth - inflation nexus and its impact on the development of the automotive industry: the case of Turkey

Economic growth is essential for development and welfare of the citizens of a country. Economic development is an intact process involving potentially entire industries in a state. Also, economic growth is associated with macroeconomic indicators such as GDP, exports, imports, budget surplus or deficits, current account balance, interest and inflation rates. Nonetheless, inflation is an important macroeconomic indicator which can influence industrial development positively or negatively. Moreover, the aim of this study is to analyse the impact of inflation on the total automotive industry production in the Republic of Turkey resting on various econometric applications as JJ cointegration test, VECM, Wald test, Gtranger test and LSM.

A comparative study of the retirement confidence level between domestic workers and OFW as linked to their job commitment

The paper investigated the retirement confidence among Domestic and Overseas Filipino Workers in relation to job commitment. Specifically, the study determined the relationship between clarity of retirement goal and retirement confidence that refers to the quality of life that could still be maintained during retirement. For several studies, savings already provided perceived confidence for retirement to would be retirees but this study would check if the perception still applies. Banks in the Philippines today offer a savings interest rate of less than 1% (excluding withholding tax) with the current inflation rate target of 4.3%. The study output could motivate government agencies to review the policy on mandatory retirement package that direct employers offer their employees for comfortable retirement. Purposive sampling was employed to determine the respondents who were the domestic and overseas Filipino workers in United Arab Emirates and New York. Explanatory-causal design was utilized to explain relationship/influence and effect of the variable/s on the retirement confidence. The results of the regression indicated that the predictor for retirement confidence explained 55.4% of the variance (R2=.55, F (4,13) = 4.03, p < 0.05). It was found that job investment (p < .01) significantly predicted retirement confidence. The result of the correlation of retirement confidence to the job commitment proves significant, (r (18) = 0.50, p < .05).

On the Optimal Management of Public Debt: a Singular Stochastic Control Problem

Consider the problem of a government that wants to reduce the debt-to-GDP (gross domestic product) ratio of a country. The government aims at choosing a debt reduction policy which minimizes the total expected cost of having debt, plus the total expected cost of interventions on the debt ratio. We model this problem as a singular stochastic control problem over an infinite time horizon. In a general not necessarily Markovian framework, we first show by probabilistic arguments that the optimal debt reduction policy can be expressed in terms of the optimal stopping rule of an auxiliary optimal stopping problem. We then exploit such a link to characterize the optimal control in a two-dimensional Markovian setting in which the state variables are the level of the debt-to-GDP ratio and the current inflation rate of the country. The latter follows uncontrolled Ornstein--Uhlenbeck dynamics and affects the growth rate of the debt ratio. We show that it is optimal for the government to adopt a policy that keeps th...

Forecasting Inflation Rate: Professional Against Academic, Which One is More Accurate

This paper evaluates the professional forecasts, those made by financial and non-financial forecasters and the aggregate between them, by comparing their results to academic forecasts. The US quarterly inflation rate and the professional forecasts are considered for the period of 1981 third quarter to 2012 final quarter. This paper examines whether academic forecasts outperforms the professional forecasts. For short term inflation forecasting the professional forecasters (non-financial, financial and the aggregate) proved to be the most accurate, however for long term inflation forecasting academic forecasts showed to be most accurate. The results also indicate that the long term aggregate forecasts related to information from the aggregate short term forecasts and current inflation rate. Furthermore, financial forecasters use the short term non-financial forecasts in their expectations and the non-financial forecasters use the short term financial forecasts in their long term expectations. In addition, the results confirm causality between the short and long term forecasts of the non-financial forecasters. For the financial inflation forecasts, there is no causality between the short and long term financial forecasts.

Sovereign Bankruptcy in the Perspective of the ASEAN Integration

This paper recognizes the presence of sovereign debt as primary means of financing its expenditures. It practically covers the gaps between cash outflows and inflows from a country’s revenues such as those coming from taxes. However, when a country’s debt goes too high that it already has difficulty in paying it off, sovereign bankruptcy occurs. This study dwells at the factors that lead to sovereign bankruptcy among ASEAN countries in terms of business confidence, credit management, resource availability and market stability. To measure the indicators in determining the nations in the verge of being bankrupt, the researchers use the data depicting the corruption perception index, GDP and investment climate index. Furthermore, data regarding the ease of doing business rankings, credit ratings, surplus/deficit of the government budget, external debt, current account balance and inflation rate are also considered. These indicators are believed to be suggestive of a country’s capability of sustaining its overall debt, highlighting the point that an ASEAN country should take into account all its resources to ensure that it doesn’t go bankrupt as a nation especially now that it is looking into integrating itself into one economic ASEAN community.

Design and assessment of solar PV plant for girls hostel (GARGI) of MNIT University, Jaipur city: A case study

Abstract In this paper designing and assessment of a solar PV plant for meeting the energy demand of girl’s hostel at MNIT University Jaipur city was analyzed. A solar PV plant was designed with its financial and environmental assessment considering recent market prices. All the aspects related to a solar PV plant were considered for financial feasibility of PV plant near this location. The different financial parameters which affect the financial feasibility of PV plant were considered i.e. discount rate, effective discount rate, rate of escalation of electricity cost, salvage value of the plant etc. The environmental aspect related with the energy generated with PV plant i.e. reduction in carbon emission and carbon credits earned was also considered. Result obtained with the assessment of the proposed plant with different discount rate and current rate of inflation shows that the max IRR 6.85% and NPV of $1,430,834 was obtained with a discount rate of 8% and an inflation rate of 7.23% when no land cost considered and if land cost was considered the maximum IRR was 1.96% and NPV of $630,833. Minimum discounted payback of the plant will be 13.4 years if inflation was considered.

Could the UK Economy Be Impacted by an Increase in Tornado Occurrence?: A Consequence of Climate Change in the 21st Century

AbstractViolent Tornadoes are uncommon in the United Kingdom when compared with the US tornado alleys where significant storms occur frequently. However, the UK does suffer moderate to strong tornadoes occasionally as evidenced, at Birmingham (2005), London (2006) and Essex (2013) all of which caused damage that cost circa £68 m and a number of fatalities. These events inevitability lead to increased interest in UK tornado research in the 21st century. Consequently, this qualitative study primarily analyses the UK tornado damage costs in recent periods by incorporating an innovative methodology: the, 3PA (Three Path Analysis). Chronological records of destruction costs from tornadoes in the United Kingdom are taken and adjusted to current inflation and market rates. These amendments offer a more reliable comparative process, evaluating losses overtime in the framework of significant social and economic change. Between 1050 and 2013, the most exorbitant and violent tornado (T8) occurred on 23rd October 1091 in London. However, the costliest tornado on record occurred on 28th July 2005 in Birmingham. This tornado (T5) had an adjusted £55 million damage cost (adjusted to 2013 inflation rates). Rapid climate change scenarios suggest that weather patterns will favour tornado generation and should, strong to violent tornadoes travel through some of the world’s trading centres i.e. London or Birmingham, damage costs would likely amount to more than £1billion, negatively affecting national GDP during the 21st century. Therefore, this research provides an important contribution to the literature that is extremely sparse with regard to the economic impact of UK tornado scenarios.

Inflation Targeting and Macroeconomic Stability with Heterogeneous Inflation Expectations

:Drawing on an extensive empirical literature that suggests persistent and time-varying heterogeneity in inflation expectations, this paper embeds two inflation forecasting heuristics–one based on the current rate of inflation, and the second anchored to the official inflation target–in a simple macrodynamic model. Decision makers switch between these forecasting heuristics based on satisficing evolutionary dynamics. We show that convergence toward an equilibrium consistent with the level of output and rate of inflation targeted by policymakers is achieved regardless of whether or not the satisficing evolutionary dynamics that guide the choices agents make between inflation forecasting strategies are subject to noise. We also show that full credulity–a situation where all agents eventually use the forecasting heuristic based on the target rate of inflation–is neither a necessary condition for realization of the inflation target nor an inevitable consequence of the economy’s achievement of this target. These results demonstrate that uncertainty in decision making resulting in norm-based inflation expectations that are both heterogeneous and time-varying need not thwart the successful conduct of macroeconomic policy.

Der Weg ist frei: mehr Steuergerechtigkeit durch nachhaltigen Abbau der kalten Progression

Der Abbau der kalten Progression wird aktuell wieder diskutiert. An einigen Eckwerten des Einkommensteuertarifs lasst sich zeigen, dass die tatsachliche Entwicklung deutlich von den zum Ausgleich der Inflation erforderlichen Tarifanderungen abweicht. Die Autoren berechnen die Mindereinnahmen bei Einfuhrung eines Tarifs auf Radern und bei Anhebung des Grundfreibetrags. In einer Verteilungsanalyse zeigen sie, dass die Entlastungseffekte hoch sind — absolut fur hohe Einkommen, relativ fur niedrige Einkommen.

The Friedman rule and inflation targeting

We use concepts from the financial economics discipline – and in particular the methods of continuous time finance – to develop a monetarist model under which the rate of inflation evolves in terms of a first-order mean reversion process based on a ‘white noise’ error structure. The Fokker–Planck (i.e. the Chapman–Kolmogorov) equation is then invoked to retrieve the steady-state (i.e. unconditional) probability distribution for the rate of inflation. Monthly data for the UK Consumer Price Index (CPI) covering the period from 1988 until 2012 are then used to estimate the parameters of the probability distribution for the UK inflation rate. The parameter estimates are compatible with the hypothesis that the UK inflation rate evolves in terms of a slightly skewed and highly leptokurtic probability distribution that encompasses non-convergent higher moments. We then determine the Hamilton–Jacobi–Bellman fundamental equation of optimality corresponding to a monetary policy loss function defined in terms of the squared difference between the targeted rate of inflation and the actual inflation rate. Optimising and then solving the Hamilton–Jacobi–Bellman equation shows that the optimal control for the rate of increase in the money supply will be a linear function of the difference between the current rate of inflation and the targeted inflation rate. The conditions under which the optimal control will lead to the Friedman rule are then determined. These conditions are used in conjunction with the Fokker–Planck equation and the mean reversion process describing the evolution of the inflation rate to determine the probability distribution for the inflation rate under the Friedman rule. This shows that whilst the empirically determined probability distribution for the UK inflation rate meets some of the conditions required for the application of the Friedman rule, it does not meet them all.

A Selected History of South African Inflation Perceptions: The Question Matters

This paper provides a selected historical overview of inflation perception surveys undertaken in South Africa between 2006 and 2010 with a view to assessing the nature of the link between inflation perceptions and inflation expectations in the latest 2012 survey. These surveys are undertaken to assess the perceptions of respondents on the degree in which historic inflation figures reflect perceptions of actual inflation, and to find some link to inflation expectations. All the earlier pilot studies on inflation perceptions and the representative samples undertaken between 2006 and 2010 (in total six pilot studies, three representative samples and one survey among central bank employees) failed to show any link between inflation perceptions and inflation expectations. These findings cast some doubt on the premise that a policy of inflation targeting anchors inflation expectations in the current rate of inflation and therefore in the announced inflation target policy rate. In response to the earlier survey results, the question on inflation perceptions was put in different ways to respondents in the most-recent (2012) inflation perception survey to retest the hypothesis that inflation perceptions and inflation expectations are linked. The findings of this survey are analysed in this paper. These findings show a possible link to inflation expectations, and will be the subject of further research. The conclusion on the assessment of inflation perceptions is that the question matters. DOI: 10.5901/mjss.2014.v5n23p126

Inflation and the Indian Economy

Inflation is as common in Indian economy as cold and flu in winter season .It is therefore one of the biggest challenge for an economy like India which is on the path of growth and development , inflation is like a caterpillar that eats away the growing cream of an economy .In this research paper we are going to analysis the inflation and its factors , the challenges that it brings and will also summarize the inflation since independence , particularly the food inflation and examine the demand and supply side factors behind surging food prices . It will further explain the methods of measuring the inflation, the different types of inflation and what factors are responsible for the current high rate of inflation in India.

Funding Teaching Practice in two East African universities: Its influence on the behaviour and practices of a supervisor

Teaching Practice is a learning process through which teacher trainees are exposed to a school environment during their internship. Time spent in the field ranges between eight and ten weeks and students are posted to different parts of the respective countries under study. The teacher trainers referred to as supervisors assume the role of mentors, facilitators of teacher trainees’ learning experiences through evaluation and reflection and fostering classroom performance. Today, faculties of education are overwhelmed by the ever increasing number of teacher trainees with disproportionate increases in human, financial and other resources essential in teacher training. The number of teacher trainees going for school practice ranges between 2500 and 3000 for each university each year. Funding Teaching Practice has not only been limited but has also not matched the current inflation rates in the two countries. The main purpose of this study was to identify how funding affects the practices and behaviour of supervisors as well as their competence in handling the expected pedagogical/education tasks during school practice. This study was done in Uganda, Makerere University, and University of Dar es Salaam in Tanzania. The methods used for data collection by researchers were qualitative using participant observation and interviews. Quantitative data were gathered as complementary information. Results show that supervisors are always in a hurry to move to the next school which might be between 10 and 30 kilometres apart. Teacher trainees are inadequately supervised mentored and have limited time for feedback from supervisors. One wonders whether there is any intended learning that takes place. The researchers recommend adequate orientation of supervisors, as well as a Diploma Course in the Theory and Practices in Teacher Education. Government needs to increase the funding for school practice if proper and adequate orientation of trainee has to bear meaningful results.

Inflation Targeting and Macroeconomic Stability with Heterogeneous Inflation Expectations

Drawing on an extensive empirical literature that suggests persistent and time-varying heterogeneity in inflation expectations, this paper embeds two inflation forecasting heuristics – one based on the current rate of inflation, the second anchored to the official inflation target – in a simple macrodynamic model. Decision makers switch between these forecasting heuristics based on satisficing evolutionary dynamics. We show that convergence towards an equilibrium consistent with the level of output and rate of inflation targeted by policy makers is achieved regardless of whether or not the satisficing evolutionary dynamics that guide the choices agents make between inflation forecasting strategies are subject to noise. We also show that full credulity – a situation where all agents eventually use the forecasting heuristic based on the target rate of inflation – is neither a necessary condition for realization of the inflation target, nor an inevitable consequence of the economy’s achievement of this target. These results demonstrate that uncertainty in decision making resulting in norm-based inflation expectations that are both heterogeneous and time-varying need not thwart the successful conduct of macroeconomic policy.

Business Cycle in China since the Lehman Crisis: Interaction among Macroeconomic Policy, Economic Growth and Inflation

AbstractThe major objectives of China's macroeconomic policy are to stabilize economic growth and inflation, which, in turn, are important factors determining key prices, such as the policy interest rate, the renminbi exchange rate and stock prices. In a framework that distinguishes different phases of the business cycle based on whether the current period's economic growth rate and inflation rate are above or below their “normal” values, this paper analyzes the interaction among macroeconomic policy, economic growth and inflation in China since the Lehman crisis, and the implications for these key prices. The path of China's economy indicates that stimulus measures taken by the government during the recession phase and tightening measures implemented during the overheating phase have helped minimize the fluctuation over the business cycle. Our analysis shows that Chinese authorities tend to rely more on adjusting the exchange rate than the interest rate to stabilize the economy. Comparing with conditions at the time of the post‐Lehman recession, the current slow pace of economic growth in China may reflect not only weakening demand, but also a lower potential growth rate associated with the arrival of the Lewis turning point.

England's New Scheme for Funding Higher Education through Student Fees: ‘Fair and Progressive’?

AbstractFrom September 2012 most home undergraduates at English universities are being charged fees of £9,000 per annum. These are funded by a government loan, which attracts interest from the moment they start their course; after three years their accumulated debt exceeds £30,000. They can also borrow to cover their living costs, on the same terms, so that those studying in London can graduate with a debt of more than £50,000—although those from low‐income families can obtain grants and universities are encouraged to provide bursaries and other support to students from underrepresented groups. Graduates start repaying their debts once their annual income exceeds £21,000—at a rate of 9% of the difference between their income and that figure: until the debt is fully repaid it continues to attract interest, by as much as three percentage points above the current inflation rate. Using data from a calculator on a government website, this paper shows that the highest‐paid graduates pay back less than those on middle incomes: the ‘squeezed middle’ pays back more not only than those on low incomes but also the better‐paid and those whose incomes increase more rapidly. This has differential effects according to occupation—and sex; and middle‐income groups also contribute more to the costs of widening participation programmes, which all universities charging more than £6,000 per annum are required to fund.

Portfolio Management Strategies: Its Importance and Challenges Under the Changed Circumstances

Every human being is required to sacrifice a certain amount of current consumption and block a significant portion of his income in the form of savings with the expectation of good return in future. Expected rate of return usually varies from person to person depending on different factors such as age, income level of investor, nature of occupation, short term, middle term and long term career goal, the percentage of income the investor prefers to save per annum, risk appetite of the investor, and selection criteria of different investable tools. A rational investor allocates his hard-earned money in different physical and financial assets. Thus construction of portfolio, reshuffling the portfolio on a continuous basis and identifying the appropriate entry and exit time for a particular security and sector and rigorously scanning the global macroeconomic environment requires sound domain knowledge and experience in the field of Economics and Finance. Researchers across the world has developed several models, tools and techniques such as Fundamental Analysis, Technical Analysis, Efficient Market Hypothesis, different portfolio optimization models but at the end of the day, there is no standardized and explicit solution for the investor. In the era of globalization, when the purchasing power of common people have gone up to a significant extent, a common feature is observed that a large section of population which includes successful doctors, reputed lawyers, renowned actors, sportspersons, engineers working in Multinational Corporations, established entrepreneurs possess huge amount of idle money but due to lack of technical knowledge they are unable to earn a higher return. The concept of Portfolio Management Service is becoming popular where clients are ready to pay high consultancy fee against which their fund will be managed by a skillful person such as a Chartered Accountant, MBA Finance Expert, a Certified Financial Planner etc. The commercial banks are also offering Cash Management Service to their HNI clients. The challenge of Portfolio Management Service increases under the changed circumstances when forecasted GDP growth rate of the nation is anticipated to fall below 7% which is quite lower than the current inflation rate as per WPI method. The role and responsibility of a portfolio manager is to ensure that rate of capital appreciation of the client’s portfolio and that should be higher than the inflation rate. In order to achieve the target, portfolio of the client has to be leveraged with more risky securities such as share, mutual fund, gold, real estate, and derivatives. When economists smell the rat that USA will be caught into the double dip recession and different European nations including Greece, Italy, and Spain are suffering from sovereign risk, capital market is not the safe haven for investor’s fund. The objective of the proposed research paper is analyzing the impact of different macroeconomic indicators, discussing relevance of different models of portfolio selection, valuation and rebalancing under the changed circumstances, focusing on risk return trade off in this volatile market. The methodology used for preparing the paper is based on secondary information available from different reputed national and international journals about the most commonly practiced portfolio management strategies. A critical analysis will be done about the different forms of risks that an investor is going to face under the new circumstances. This paper will provide a new direction to which extent portfolio can be immunized against the risk and uncertainties of the market.

Variable Lifetime Annuities: Can You Live Long Enough To Receive Fair Value?

&lt;span&gt;This article presents an analysis of variable lifetime annuities and quantifies the advantages and disadvantages associated with this type of instrument. Given recent long-term rates of return and current low inflation rates, variable annuity contracts provide an effective means of compensating for inflation. An individual only needs to invest a small portion of retirement funds in variable annuities to protest the entire portfolio against the risk of long-term inflation without the risk of having ones entire retirement income based on variable annuities.&lt;/span&gt;