Current Inflation Rate Research Articles

Microbiology specimens obtained at the time of surgical lung biopsy for interstitial lung disease: clinical yield and cost analysis

In efforts to obtain complete results, current practice in surgical lung biopsy (LB) for interstitial lung disease (ILD) recommends sending lung tissue samples for bacterial, mycobacterial, fungal, and viral cultures. This study assesses the value of this practice by evaluating the microbiology findings obtained from LB for ILD and their associated costs. A total of 296 consecutive patients (140 women, 156 men, median age=61 years) underwent LB for ILD from 2002 to 2009. All had lung tissue sent for microbiology examination. Microbiology results and resultant changes in patient management were analyzed retrospectively. A cost analysis was performed based upon nominal hospital charges adjusted on current inflation rates. Cost data included cultures, stains, smears, direct fluorescent antibody studies, and microbiologist consulting fees. As many as 25 patients (8.4%) underwent open LB and 271 (91.6%) underwent thoracoscopic LB. A total of 592 specimens were assessed (range 1-4 per patient). The most common pathologic diagnoses were idiopathic pulmonary fibrosis in 122 (41.2%), cryptogenic organizing pneumonia in 31 (10.5%), and respiratory bronchiolitis ILD in 16 (5.4%). Microbiology testing was negative in 174 patients (58.8%). A total of 118 of 122 (96.7%) positive results were clinically considered to be contaminants and resulted in no change in clinical management. The most common contaminants were Propionibacterium acnes (38 patients; 31%) and Penicillium fungus (16 patients; 13%). In only four patients (1.4%), the organism cultured (Nocardia one, Histoplasma one, and Aspergillus fumigatus two) resulted in a change in clinical management. The cost of microbiology studies per specimen was $984 (€709), with a total cost for the study cohort being $582,000 (€420,000). The yield and impact on clinical management of microbiology specimens from LB for ILD is very low. Its routine use in LB is questionable. We suggest it should be limited to those cases of ILD with a high suspicion of infection. Substantial cost savings are possible with this change in clinical practice.

A new housing finance model for the base of the pyramid: The case of Turkey

There is no solid housing finance model that will solve the shelter needs of low-income household groups who do not have adequate capital to buy houses in developing countries and work properly during an economic crisis. To this end, the purpose of this paper is to propose a new housing finance model that will function even during a financial or an economic crisis for the base of the pyramid (low-income households) in developing countries. A scenario analysis is conducted based on the current inflation and interest rates in Turkey in order to test the housing finance model. It is found in the simulations that the model works properly for low-income households in Turkey during a financial or an economic crisis. Key words: Mortgage, housing finance, low-income households, economic crisis, financial risks.

Monetary policy and learning from the central bank's forecast

We examine the expectational stability (E-stability) of rational expectations equilibrium (REE) in a standard New Keynesian model in which private agents refer to the central bank's forecast in the process of adaptive learning. To satisfy the E-stability condition in this environment, the central bank must respond more strongly to the expected inflation rate than the extent to which the Taylor principle suggests. However, the central bank's strong reaction to the expected inflation rate raises the possibility of indeterminacy of the REE. In considering these problems, a robust policy requires responding to the current inflation rate to a certain degree.

The Role of Media for Inflation Forecast Disagreement of Households and Professional Forecasters

This paper investigates the effects of media coverage and macroeconomic conditions on inflation forecast disagreement of German households and professional forecasters. We adopt a Bayesian learning model in which media coverage of inflation affects forecast disagreement by influencing information sets as well as predictor choice. Our empirical results show that disagreement of households depends on the content of news stories (tone) but is unaffected by reporting intensity (volume) and by the heterogeneity of story content (information entropy). Disagreement of professionals does not depend on media coverage. With respect to the influence of macroeconomic variables we provide evidence that disagreement of households and professionals primarily depends on the current rate of inflation.

Enrollment Spike Pressures Medicaid's Strained Budget

Back to table of contents Previous article Next article Government NewsFull AccessEnrollment Spike Pressures Medicaid's Strained BudgetRich DalyRich DalySearch for more papers by this authorPublished Online:19 Dec 2008https://doi.org/10.1176/pn.43.24.0008Medicaid spending will double in 10 years, a projection based on its current rate of growth, according to the program's first actuarial report. The program's enrollment is expected to grow steadily from 50 million to 55 million over that decade.The spending growth rate, as projected by the Centers for Medicare and Medicaid Services (CMS), is significantly higher than the current inflation rate and will place an increasing strain on states, which along with the federal government fund Medicaid.“This report should serve as an urgent reminder that the current path of Medicaid spending is unsustainable for both federal and state governments,” said Mike Leavitt, secretary of Health and Human Services.“ If nothing is done to rein in these costs, access to health care for the nation's most vulnerable citizens could be threatened.”The report is CMS's first long-term spending projection for Medicaid since the program's inception in 1965. (The agency has long produced 75-year projections of Medicare expenditures for the annual report of the Medicare Board of Trustees.)The “2008 Actuarial Report on the Financial Outlook for Medicaid” found that Medicaid expenditures would grow from $333.2 billion in Fiscal 2007—$190.6 billion, or 57 percent, in federal spending and $142.6 billion, or 43 percent, in state spending—to more than $673 billion by Fiscal 2017.The report projected that Medicaid spending will grow by nearly 8 percent annually, compared with a projected annual average gross domestic product growth of 4.8 percent.The expected rise in Medicaid's costs, according to the report, will stem from the growing number of enrollees, rising wage and price inflation in the medical sector, availability of a wider array of health care treatments, and the use of more complex and expensive medical services.The projected increase in Medicaid spending comes as many states have begun to report that enrollments have spiked due to rising unemployment amid the ongoing financial downturn. Most state Medicaid programs expect to face budget shortfalls next year as the nation's economy stalls and demand for public health care assistance continues to rise, according to an annual survey of state program directors released in September.Other findings of the actuarial report include that in Fiscal 2007 average per-enrollee spending was $6,120, Medicaid spending was 14.8 percent of all U.S. health care spending in 2006, and the program was the largest general revenue expenditure on health care for both the federal and state governments. Medicaid accounted for 7 percent of the federal budget in 2007 and is expected to consume 8.4 percent of the budget by 2013.The dramatic growth in Medicaid spending did not surprise mental health advocates. The projected increases in Medicaid costs fit with the rising costs of medication and the level of care needed for the seriously ill population that the program serves, according to Laurence Miller, M.D., chair of APA's Committee on Public Funding for Psychiatric Services.“Medicaid [serves] more of a chronic disease population,” Miller said. “You just can't ignore those people, and if you did, then the impact of that would be even worse for the economy.”He said federal and state policymakers face a difficult “balancing act” regarding Medicaid because they have to weigh managing costs with ensuring access to medical care.The report arrives at a time when some health care advocates are urging the use of Medicaid as a vehicle for expanding health care access to the nation's 47 million uninsured people (Psychiatric News, November 7).Sen. Max Baucus (D-Mont.) issued a health care expansion blueprint in November that listed among its goals expansion of Medicaid eligibility to all people whose incomes were up to 100 percent of the federal poverty level. Baucus, one of the leading congressional voices on health care reform, plans to introduce legislation in 2009 to implement his blueprint (see Original article: Ambitious Health Reform Plans Take Shape in Senate).Such an expanded role for Medicaid fits with the popular but mistaken belief that all low-income people are qualified for coverage under the program. Medicaid eligibility is limited to low-income children and adults who fall into one of nearly 50 categories of eligibility, such as pregnant women.Miller said he was uncertain of the impact that Medicaid's large projected future growth costs would have on plans to expand it as part of the effort to reform the U.S. health care system, but he believes that any change is likely to start with Medicaid's core focus: children.“As the new administration expands the focus of health care it will start with kids, which will affect the budget,” he said.The “2008 Actuarial Report on the Financial Outlook for Medicaid” is posted at<http://cms.hhs.gov/ActuarialStudies/03_MedicaidReport.asp>.▪ ISSUES NewArchived

Identifying the new Keynesian Phillips curve

AbstractPhillips curves are central to discussions of inflation dynamics and monetary policy. The hybrid new Keynesian Phillips curve (NKPC) describes how past inflation, expected future inflation, and a measure of real aggregate demand drive the current inflation rate. This paper studies the (potential) weak identification of the NKPC under Generalized Method of Moments and traces this syndrome to a lack of higher‐order dynamics in exogenous variables. We employ analytic methods to understand the economics of the NKPC identification problem in the canonical three‐equation, new Keynesian model. We revisit the empirical evidence for the USA, the UK, and Canada by constructing tests and confidence intervals based on the Anderson and Rubin (1949) statistic, which is robust to weak identification. We also apply the Guggenberger and Smith (2008) LM test to the underlying NKPC pricing parameters. Both tests yield little evidence of forward‐looking inflation dynamics. Copyright © 2008 John Wiley &amp; Sons, Ltd.

The premium of inflation-indexed life insurances for the Romanian life table

This paper deals with the pricing process of life insurances that provide an insured sum indexed annually according to the current inflation rate. In these terms we propose an appropriate formula for the discount factor. In order to describe the inflation, we consider a stochastic autoregressive model. We deduce analytical expressions for the mean value and the variance of random variable defined as the present value of 1 unit indexed annually according to the inflation rate, payable over t years, when inflation is generated by an autoregressive process of order one. At the same time, we obtain numerical results for the Romanian life table, regarding the mean and the standard deviation for the actuarial present value of a pure endowment life insurance with the sum insured indexed annually with the inflation rate.

Keynesian AD-AS Vadis?

We formulate a dynamic AD-AS model based on gradually adjusting wages and prices, perfect foresight of current inflation rates and adaptive expectations concerning the inflation climate in which the economy operates. The model consists of a wage and a price Phillips curve, a dynamic IS curve as well as a dynamic employment adjustment equation (Okun's law) and a Taylor interest rate rule. The model can be reduced to a 3D dynamical system by a suitable choice of the Taylor rule and implies strong stability results, in particular for an appropriately chosen interest rate policy rule. Through instrumental variables GMM system estimation with aggregate time series data for the U.K. economy, we obtain parameter estimates which support the specification of our theoretical model and its stability implications. We contrast these results with the standard (formally similarly structured) New Keynesian model with staggered wage and price setting where determinacy of the dynamics represents a severe problem and where (if determinacy can be achieved) inertia-free stability is obtained by the very choice of the solution method.

Prescription charges in the UK will rise by less than the current rate of inflation in 2007,

Prescription charges in the UK will rise by less than the current rate of inflation in 2007,

The Timeless Perspective vs. Discretion: Theory and Monetary Policy Implications for an Open Economy

This paper proposes an open-economy Phillips Curve that features a real exchange rate channel. The resulting target rule under optimal policy from a timeless perspective (TP) involves additional history dependence in the form of lagged inflation. The target rule also depends on the discount factor as well as IS and Phillips Curve parameters. This is in sharp contrast to a closed economy where the target rule depends only on the change in the output gap, the current rate of inflation and the structural parameter in the Phillips Curve. Because of the additional history dependence in an open economy, price level targeting is no longer consistent with optimal policy. If a real exchange rate channel does not exist in the Phillips Curve, monetary policy eases in the wake of a positive cost-push disturbance under policy from a TP and is thus diametrically opposed to same under discretion. Maximum gains accrue from commitment relative to discretion in an open economy where the real exchange rate is absent from the Phillips Curve and the policymaker places strong emphasis on maintaining price stability.

Monetary Policy and the Taylor Principle in Open Economies

AbstractNowadays, central banks mostly conduct monetary policy by setting nominal interest rates. A widely held view is that central banks can stabilize inflation if they follow the Taylor principle, which requires raising the nominal interest rate more than one‐for‐one in response to higher inflation. Is this also correct in an economy open to international trade? Exchange rate changes triggered by interest rate policy might interfere with inflation stabilization if they alter import prices. The paper shows that this destabilizing effect can prevail if (a) the central bank uses consumer (rather than producer) prices as its inflation indicator or directly reacts to currency depreciation, and (b) if it bases interest rate decisions on expected future inflation. Thus, if the central bank looks at current inflation rates and ignores exchange rate changes, Taylor‐style interest rate setting policies are advisable in open economies as well.

Keynesian Disequilibrium Dynamics: Convergence, Roads to Instability and the Emergence of Complex Business Fluctuations

We reformulate the traditional AS-AD growth model of the Neoclassical Synthesis (stage I) with a Taylor policy rule replacing the conventional LM-curve, with gradually adjusting wages as well as prices, and with perfect foresight on current inflation rates and an adaptively revised notion of an inflationary climate in which the economy is operating. We compare this approach with the New Keynesian approach, the Neoclassical Synthesis, stage II, with staggered price and wage setting and find various common components, yet with radically different dynamic implications due to our treatment of the forward-looking part of our wage-price spiral. We show for a system estimate of our model that it implies qualitatively local asymptotic stability and when its estimated form is simulated in response to isolated shocks strongly damped business fluctuations, due to a stable interaction of goods market dynamics with the interest rate policy of the central bank and due to a normal working of a real-wage feedback chain. These results are however endangered – leading in fact to economic breakdown – when there is a global floor to money wage inflation rates. In this case, the return of some money wage flexibility in deep depressions is of help in restoring viability of the model, thereby even avoiding explosive dynamics and the collapse of the economy. This situation leads to viable, but complex business fluctuations.

Keynesian Macrodynamics and the Phillips Curve: An Estimated Baseline Macromodel for the U.S. Economy

In this paper we formulate a baseline disequilibrium AS-AD model and empirically estimate it with time series data for the US-economy. The version of the model used here exhibits a Phillips-curve, a dynamic IS curve and a Taylor interest rate rule. It is based on sticky wages and prices, perfect foresight of current inflation rates and adaptive expectations concerning the inflation climate in which the economy operates. A version of Okun's law is used to link capacity utilization to employment. Our proposed nonlinear 5D model of real market dynamics overcomes anomalies of the old Neoclassical synthesis and also the rational expectations methodology of the new Neoclassical Synthesis. It resembles New Keynesian macroeconomics but permits nonclearing of markets. It exhibits typical Keynesian feedback structures with asymptotic stability of its steady state for low adjustment speeds and with loss of stability { generally by way of Hopf bifurcations { when certain adjustment speeds are made sufficiently large. We provide system estimates of our model, for quarterly time series data of the U.S. economy 1965.1-2001.1, and study the stability features of the U.S. economy with respect to its various feedback channels from an empirical perspective. Based on these estimates, which in particular imply that goods market dynamics are profit led, we find that the dynamics are strongly convergent around the steady state, if monetary policy is sufficiently active, but will lose this feature if the inflationary climate variable or the price inflation rate itself adjusts sufficiently fast. We also study to what extent more active interest rate feedback rules or downward wage rigidity can stabilize the dynamics in the large when the steady state is locally repelling. We study the economy's behavior due to faster adjustments. We find that monetary policy should allow for sufficient steady state inflation in order to avoid stability problems in areas of the phase space where wages are not flexible in a downward direction.

Keynesian dynamics and the wage–price spiral: A baseline disequilibrium model

We reformulate the traditional AS-AD growth model of the Neoclassical synthesis, stage I, as a disequilibrium approach to aggregate supply analysis, with sticky wages, sticky prices, myopic perfect foresight on current inflation rates, and adaptively formed medium-run expectations concerning the investment and the inflation climate. Both LM curve and an interest rate policy rule are considered. The resulting nonlinear 5D model of labor and goods market disequilibrium avoids striking anomalies of the traditional Neoclassical synthesis AS-AD model. It exhibits instead Keynesian feedback dynamics proper with asymptotic stability for low adjustment speeds and with cyclical loss of stability when some adjustment speeds are sufficiently large. In such cases, downward money wage rigidities serve to make the overall dynamics bounded and thus viable. We thus obtain a baseline D(is equilibrium)AS-AD model with Keynesian feedback channels with a rich set of stability/instability features as sources of the business cycle. The outcomes of the model stand in stark contrast to those of the currently fashionable (closely related) model of the New Keynesian alternative.

Keynesian Dynamics and the Wage-Price Spiral: A Baseline Disequilibrium Model

We reformulate and extend the standard AS-AD growth model of the Neoclassical Synthesis (stage I) with its traditional microfoundations. The model retains an LM curve in the place of a Taylor interest rate rule, exhibits sticky wages as well as sticky prices, myopic perfect foresight of current inflation rates and adaptively formed medium-run expectations concerning the investment and the inflation climate in which the economy is operating. The resulting nonlinear 5D model of labor and goods market disequilibrium dynamics avoids the striking anomalies of the standard AS-AD model of the Neoclassical synthesis (stage I). It exhibits instead Keynesian feedback dynamics proper with, in particular, asymptotic stability of its unique interior steady state for low adjustment speeds and with cyclical loss of stability - by way of Hopf bifurcations - when some adjustment speeds are made sufficiently large, eventually leading to purely explosive dynamics. In such cases, downward money wage rigidity serves to make the overall dynamics bounded and thus viable. We thus obtain and analyze a baseline D(isequilibrium)AS-AD model characterised by Keynesian feedback channels with a rich set of stability/instability features as the sources of the business cycle. The outcomes of the model stand in stark contrast to those of the currently fashionable baseline model of the New Keynesian alternative (the Neoclassical Synthesis, stage II) that we suggest is more limited in scope.

The relevance of real-time data in estimating reaction functions for the euro area

This paper tackles the issue of the incompleteness of information available to the central bank, when taking its monetary policy decisions. It is focused on euro area data and based on the simplistic assumption that the central bank follows a simple monetary policy rule à la Taylor. Along the lines of the work by Orphanides, our aim is to assess whether estimates of reaction functions, which are carried out using revised data for the euro area, can be misleading. In essence, the analysis yields indications which are consistent with the findings by Orphanides for the United States. First, the results suggest that it would be preferable for a central bank not to attach too much weight to output-gap measures in policy analysis, given that such measures are subject to large revisions over time. Second, the coefficients of a simple Taylor rule estimated in real time differ quite considerably from those related to the same rule estimated on the basis of ex post revised data. More precisely, a coefficient for inflation larger than one (which is a requirement for a unique equilibrium in many theoretical models) in real time is found only when a forward-looking specification based on the Survey of Professional Forecasters is estimated. On the contrary, when revised data are used, the same result is obtained when the Taylor rule includes the current inflation rate. This shows how misleading inferences can occur when appropriate available data are not taken into account.

Identifying the New Keynesian Phillips Curve

Phillips curves are central to discussions of inflation dynamics and monetary policy. New Keynesian Phillips curves describe how past inflation, expected future inflation, and a measure of real marginal cost or an output gap drive the current inflation rate. This paper studies the (potential) weak identification of these curves under GMM and traces this syndrome to a lack of persistence in either exogenous variables or shocks. We employ analytic methods to understand the identification problem in several statistical environments: under strict exogeneity, in a vector autoregression, and in the canonical three-equation, New Keynesian model. Given U.S., U.K., and Canadian data, we revisit the empirical evidence and construct tests and confidence intervals based on exact and pivotal Anderson-Rubin statistics that are robust to weak identification. These tests find little evidence of forward-looking inflation dynamics.

Modelling Short-term Interest Rates in the Euro Area Using Business Survey Data

Interest rates play a key role in free market economies. According to the Taylor rule, shortterm interest rates depend on deviations of the current inflation rate from a normative value and of the output gap. Given the difficulty of observing the output gap, we postulate that alternative indicators of pressure on capacity should be monitored, especially those obtained from business surveys. Primarily, our work compares those empirically observed capacity utilization figures (CU) with the difference between actual and potential GDP, and tries to assess monetary policy on the basis of these indicators. The analysis of monetary policy is done in the first case by using a simple single equation framework and in a next step by using a more advanced vector autoregressive model. Given the fact that the survey measure of output gap captures only manufacturing and thus omits the important service sector which has a high share in value added we constructed a more comprehensive measure of capacity utilization (CU*). The new indicator is based on CU in manufacturing industry and on the confidence indicator for services...

Commitment Compliance in G-7 Summit Macroeconomic Policy Coordination

Conventional wisdom suggests that the G-7 summit makes few substantive decisions and lacks effective monitoring and sanctioning mechanisms to enforce individual countries' commitments. However, evidence exists that G-7 countries do honor their commitments announced in summit declarations. In this article, I offer and test for the period from 1975 to 1989 several causal explanations for compliance with non-binding commitments dealing with inflation control: institutional constraints on monetary and fiscal policymaking, electoral politics, uncertainty, and reciprocity Reciprocating behaviors, independent central banks, and high current inflation rates correlate positively with compliance over inflation-control commitments. In addition, there is some evidence that divided/coalition governments and uncertainty reduce compliance. Theoretical and policy implications of the findings are discussed.

The Taylor Rule: A Useful Monetary Policy Benchmark for the Euro Area?

This paper explores the Taylor rule – defined as an instrument rule linking the central bank's policy rate to the current inflation rate and the output gap – as a benchmark for analysing monetary policy in the euro area. First, it analyses the stabilization properties of the Taylor rule in a closed economy model of the euro area, estimated using aggregate data from five EU countries. An optimized Taylor rule performs quite well compared to the unconstrained optimal feedback rule. Second, the robustness of these results to estimation error in the output gap and model uncertainty is examined