Inflation Dynamics Research Articles

Hamilton–Jacobi method in non-minimal coupling inflation: metric vs. Palatini

The Hamilton–Jacobi approach offers a natural framework for analyzing inflationary dynamics, relying on the specified Hubble parameter rather than the potential, particularly in extended gravity theories. In this study, we apply this method to investigate inflation with non-minimal coupling, comparing the metric and Palatini formulations. Using a power-law Hubble parameter in the Jordan frame, we find that both formalisms satisfy the attractor condition, with a slight suppression in the Palatini case. Our results align closely with the latest observational data, demonstrating the Palatini formalism’s heightened sensitivity to coupling constants and model parameters. Furthermore, we show that within the model’s viable parameter space, the reheating process can achieve sufficiently high temperatures to support successful leptogenesis.

Financing Economic Development in the Face of Fiscal Constraints: Fiscal Sustainability Measures and Inflation Dynamics in Nigeria

Financing Economic Development in the Face of Fiscal Constraints: Fiscal Sustainability Measures and Inflation Dynamics in Nigeria

Dynamics of Interest Rates, Inflation and Forex in ARDL Framework: Evidence from India in an SDG Context

Objective: This study examines the dynamic causal relationship between the exchange rate, inflation, and interest rate from 2011 to 2023. Method: Using both the linear autoregressive distributed lag (ARDL) and nonlinear ARDL (NARDL) methods, the results show that exchange rate and inflation have an equilibrium relationship over the long term. Results and Discussion: However, the connection between the interest rate and the exchange rate is unstable. As the inflation rate changes, the exchange rate displays its dynamic behavior. As opposed to this, interest rates shouldn't always affect how currencies behave. Policy ramifications of this study are evident. Price stability can only be attained with accurate fundamentals. Central banks that promote environmental sustainability and align with the United Nations' Sustainable Development Goals (SDGs) frequently use a Sustainability-Linked Monetary Policy (SLMP) framework. Contributions: This framework targets emission activities through interest rates or loan-to-value ratios, with the goal of influencing liquidity for greener production. Conclusions: However, the welfare implications of such policies are still unclear (MAS, 2021; LMA, 2019; DBS, 2021; BOJ, 2021; Mizuho, 2021).

Price and Wage Inflation in Brazil: An Empirical Analysis from 1999 to 2022

ABSTRACT This paper discusses the trajectory of inflation in Brazil after the adoption of the Inflation Targeting Regime, aiming to identify its main determinants from a post-Keynesian approach that points out the relevance of distributional conflict for inflation dynamics. A descriptive analysis of inflation behavior in Brazil is carried out, in which four distinct phases are identified: 1999–2004, 2005–2010, 2011–2015 and 2016 to mid-2022. Changes in the Extended National Consumer Price Index (IPCA) during these phases are explained by three main reasons: (i) imported inflation and exchange rate; (ii) administered prices; and (iii) wage inflation. Thus, it is argued that inflation in Brazil was mostly generated by cost pressures. We estimate Phillips curves that incorporate cost and demand elements in order to identify which of them exerted the greatest influence on the inflation rate as measured by the IPCA. The estimation was performed with Vector Error Correction (VEC) models from March 2013 to January 2022. A complementary model was estimated to investigate the long-term relationship between imported inflation and demand pressures on price inflation.

Sectoral inflation under fragmentation of information

Abstract We examine the role of fragmentation of information in explaining the dynamics of sectoral inflation. Using the quarterly survey of firms’ prices and costs in Japan, we first document two empirical facts: the sensitivity of sectoral inflation to changes in sectoral costs monotonically decreases with the dispersion of changes in (i) current costs and (ii) those in the past. A direct application of the dispersed information model can reconcile the fact (i) but fails to reconcile the fact (ii). We then extend the standard imperfect information model to construct a dynamic general equilibrium model that features fragmentation of information, wherein a finite number of groups of firms exist and firms in the same group share common idiosyncratic noises in their signals. Using this model, we find that the degree of fragmentation of information plays a crucial role in explaining these empirical facts.

Influence of oil price fluctuations on inflation uncertainty

PurposeThe purpose of this study is to achieve a comprehensive understanding of how the intricate interconnections between oil price fluctuations, supply chain disruptions and shifting demand patterns collectively shape inflation dynamics within the Chinese economy, especially during critical periods such as the Covid-19 pandemic and geopolitical events like the Russia–Ukraine conflict. The importance of assessing the impact of oil price volatility on China’s inflation becomes particularly pronounced amidst these challenging circumstances.Design/methodology/approachThis study uses the Markov Regime-Switching generalized autoregressive conditional heteroskedasticity (MRS-GARCH) family of models under student’s t-distributions to measure the uncertainty of oil prices and the inflation rate during the period spanning from 1994 to 2023 in China.FindingsThe results indicate that the MRS-GJR-GARCH-in-mean (MRS-GARCH-M) models, when used under student’s t-distributions, exhibit superior performance in modeling the volatility of both oil prices and the inflation rate. This finding underscores the effectiveness of these models in capturing the intricacies of volatility dynamics in the context of oil prices and inflation. The study has identified compelling evidence of regime-switching behavior within the oil price market. Subsequently, the author conducted an analysis by extracting the forecastable component, which represents the expected variation, from the best-fitted models. This allowed us to isolate the time series of oil price uncertainty, representing the unforecastable component. With this unforecastable component in hand, the author proceeded to estimate the impact of oil price fluctuations on the inflation rate. To accomplish this, the author used an autoregressive distributed lag model, which enables us to explore the dynamic relationships and lags between these crucial economic variables. The study further reveals that fluctuations in oil prices exert a noteworthy and discernible influence on the inflation rate, with distinct patterns observed across different economic regimes. The findings indicate a consistent positive impact of oil prices on inflation rate uncertainty, particularly within export-oriented and import-oriented industries, under both of these economic regimes.Originality/valueThis study offers original value by analyzing the impact of crude oil price volatility on inflation in China. It provides unique insights into the relationship between energy market fluctuations and macroeconomic stability in one of the world’s largest economies. By focusing on crude oil – a critical but often overlooked component – this research enhances understanding of how energy price dynamics influence inflationary trends. The findings can inform policymakers and stakeholders about the significance of energy market stability for maintaining economic stability and guiding inflation control measures in China.

Thermal effects on warm chromoinflation

We explore a model of a pseudo-Nambu-Goldstone boson inflaton field coupled to a non-Abelian SU(2) gauge field. This model naturally leads to a warm inflation scenario, where the inflationary dynamics is dominated by thermal dissipation. In this work, we consider a scenario where the inflaton, an axion-like field, is coupled to the SU(2) gauge field, similar to chromoinflation models. Both the inflaton and the gauge field with a non-vanishing vacuum expectation value are coupled to a thermal radiation bath. We demonstrate that the presence of the thermal bath during warm chromoinflation induces a thermal plasma mass for the background gauge field. This thermal mass can significantly disrupt the dynamics of the background gauge field, thereby driving it to its trivial null solution.

Randers metric and inflationary dynamics: A Finsler geometry perspective on cosmological evolution

Randers metric and inflationary dynamics: A Finsler geometry perspective on cosmological evolution

Large field polynomial inflation in Palatini f(R,ϕ) gravity

In this paper, we employ the Palatini formalism to investigate the dynamics of large-field inflation using a renormalizable polynomial inflaton potential in the context of f(R,ϕ) gravity. Assuming instant reheating, we make a comparative analysis of large-field polynomial inflation (PI). We first consider the minimal and non-minimal coupling of inflaton in R gravity, and then we continue with the minimally and non-minimally coupled inflaton in f(R,ϕ) gravity. We scan the parameter space for the inflationary predictions (n s and r) consistent with the Planck and BICEP/Keck 2018 results as well as the sensitivity forecast of the future CMB-S4 and depict the compliant regions in the ϕ 0-β plane where ϕ 0 and β are two parameters of polynomial inflation model which control the saddle point of the potential and the flatness in the vicinity of this point respectively. We find that a substantial portion of the parameter space aligns with the observational data.

Exploring the Dynamics of Inflation, Interest Rates, and Bond Yields: A Comprehensive Regression Model Comparison

Exploring the Dynamics of Inflation, Interest Rates, and Bond Yields: A Comprehensive Regression Model Comparison

Inflation dynamics and the role of domestic factors

The observed inflation differentials across euro area countries, along with the divergence between the Harmonised Index of Consumer Prices (HICP) and GDP deflator trends within countries, highlight the potential role of country-specific institutional and structural characteristics in shaping inflation dynamics in response to import price shocks. This paper investigates the role of domestic factors in shaping inflationary dynamics. It employs a Dynamic Stochastic General Equilibrium (DSGE) model to examine the macroeconomic effects of a temporary import price shock under varying degrees of real wage rigidity in the labour market. The results indicate that economies with high degrees of real wage rigidity are likely to experience higher and more persistent inflationary pressures than economies with low degrees of real wage rigidity. Real wage rigidities constrain firms from absorbing part of the higher import costs through reductions in labour costs, thus resulting in greater pass-through of input costs to final prices, which in turn generates strong and persistent inflation and adversely affects employment and output. In contrast, in economies with low real wage rigidities firms have more flexibility in managing rising import costs, thereby mitigating the negative impact on output. Additionally, the paper demonstrates a relatively straightforward methodology using national accounts data to explore the relationship between domestic factors and inflation dynamics. Case studies for the euro area and Greece reveal that the rise in domestic inflation since 2021 is largely associated with an increase in profits. Labour costs are also linked to inflationary pressures, though their contribution is relatively smaller than that of profits. In Greece, the increase in profits is primarily associated with the services sector, followed by the industry sector.

Remittance and Inflation Dynamics in Nepal: An Econometric Analysis

This empirical study investigates the remittance and inflation dynamics in the present context of Nepal. Major objective of the study is to find out the impact of remittance on inflation in Nepal. It also aims to find out the relationship between CPI and the independent variables- remittance, exchange rate, money supply and population. Data were obtained from the published source of world bank from 1993 to 2022. Augmented Dickey-Fuller unit root test was implied to test the stationary situation of the variables to remove the problem of spurious regression. After confirming some variables were integrated in I (0) and some are in I (1) order, ARDL model was applied to find out co-integration of the variables for long run relationship. Error corrections model was used after ARDL model that helps to show the speed of adjustment towards long-run equilibrium. Results show remittance and inflation are co-integrated and the coefficient of error correction term was negative and significant which indicates the long-run relationship. So remittance from foreign sectors should be used not only in consumption sectors that promotes inflation but it should be used in productive sectors too. This study will be helpful to policymakers whether remittance is causing inflation in the country.

Turkey’s Climate Change Policies and Regulations

This paper examines the relationship between exchange rate pass-through (ERPT) and inflation within dynamic structure, focusing on the impact of exchange rate changes on consumer prices (CPI) in Türkiye. The theoretical and empirical analysis builds on existing frameworks, considering how central banks’ reactions to exchange rate movements play a crucial role in shaping inflationary dynamics. The study uses the ARDL model to analyse the long-term and short-term effects of exchange rate fluctuations on inflation, focusing on the interaction between the CPI and the nominal exchange rate (NEX). For these goals, we employed monthly data over the January of 2000 and August of 2024. The analysis is based on two baseline models: the first examines how changes in the exchange rate directly impact the CPI, while the second assesses the rate of change in inflation due to exchange rate variations. Stationarity of the data is ensured through unit root testing, which confirms the appropriateness of using the ARDL model. The results reveal that exchange rate movements significantly affect CPI, with a 1% increase in the exchange rate leading to a 1.1625% increase in th e CPI in the long run, as evidenced by a p-value of 0.00. Additionally, in the short term, a 1% increase in the exchange rate results in a 0.1164% rise in the CPI, indicating a persistent effect on prices. The error correction term further supports the existence of a significant relationship between the CPI and the exchange rate in both short and long-term dynamics. Based on model 2, exchange rate changes have a significant effect on inflation in the long-term relationship. In particular, it has been shown that exchange rate increases can lead to long-term increases in inflation.

Financial Sector Development and Inflation Dynamics in Tanzania: An Empirical Assessment of Macroeconomic Stability

This study empirically analyzes the impact of financial sector development on the inflation rate in Tanzania, focusing on credit to the private sector as a proxy for financial sector growth. Quarterly time series data are collected from 2003 to 2023. Autoregressive Distributed Lag (ARDL) Model estimation with a bound cointegration test establishes the short and long-term relationship. The results show that financial sector development increases the inflation rate in the long run. The findings underscore the importance of balancing financial sector expansion with measures to control inflation and ensure that credit growth supports sustainable economic development.

SPATIAL PANEL MODELING OF PROVINCIAL INFLATION IN INDONESIA TO MITIGATE ECONOMIC IMPACTS OF HEALTH CRISES

Probabilistic statistical modeling simplifies complex issues, including economic and health challenges, by applying inductive statistics. Spatial panel modeling, using Queen Contiguity weighting, has proven to be essential for analyzing inflation expenditure patterns during health crises, such as COVID-19 in Indonesia. This study highlights the impact of inflation on national economic stability and explores the inter-provincial relationships that influence inflation dynamics across expenditure groups. The purpose of this study is to develop a spatial panel model to address this gap, offering insights for policy and recovery strategies. The results reveal significant spatial interdependence in provincial inflation data, underscoring the role of spatial factors in economic analysis. Two models are identified: Spatial Autoregressive Model with Random Effects (SAR-RE) before the crisis and Spatial Error Model with Random Effects (SEM-RE) during the crisis. Transportation facilities consistently affect inflation, demonstrating the effectiveness of spatial panel modeling in guiding policies for economic stability and recovery.

Dampak Inflasi terhadap Kesenjangan Pendapatan dan Daya Beli Masyarakat di Indonesia

Inflation has an impact on income inequality and purchasing power in Indonesia. In recent years, Indonesians have increasingly felt significant economic pressure due to the continuous increase in the prices of goods and services. This research aims to explore the underlying causes of inflation, control efforts, and its impact on people's purchasing power to comprehensively understand Indonesia's inflation dynamics. The method used in this research is a library research approach. Inflation not only affects the value of the currency, but also changes people's spending patterns and purchasing priorities. To overcome this problem, the government implements policies that support the improvement of people's purchasing power and income distribution. This research provides important insights into the interaction between inflation and people's economic conditions, as well as steps that can be taken to create a more stable economic environment.

Numerical simulations of inflationary dynamics: Slow roll and beyond

Numerical simulations of inflationary dynamics: Slow roll and beyond

Inflation dynamics and retail energy prices in Nigerian states

This study investigates the relationship between inflation dynamics and retail energy prices across Nigerian states. The paper utilizes LSDV and SYS-GMM techniques for the estimation of the static and dynamic panel models. The research disaggregates energy prices into PMS, AGO, HHK and Gas, with CPI as the dependent variable. State Revenue per capita income, representing demand-pull factor of inflation, is used to capture excess liquidity's impact on inflation. Key findings reveal that PMS, AGO, and HHK have significant and distinct effects on inflation, with PMS and AGO driving the largest increases in CPI. Gas price also contribute to inflation, but its impact is moderated by a substitution effect, where consumers shift to gas in response to rising prices of HHK and other household cooking energy sources. This substitution effect reduces the inflationary pressure from gas, making its overall contribution to CPI less pronounced. Importantly, State Revenue per capita income is positively correlated with inflation, highlighting the role of federal transfers in exacerbating demand-pull inflation. For policymakers, these findings emphasize the importance of targeted interventions to stabilize energy prices, particularly PMS, AGO and federal transfers in shaping local economic dynamics and inflationary pressures. This targeted interventions to stabilize energy prices are vital for mitigating inflationary pressures in Nigerian states, as they account for regional economic differences, ensuring more effective and equitable economic stability across the country.

The influence of oil investors' sentiment on inflation dynamics and uncertainty

The influence of oil investors' sentiment on inflation dynamics and uncertainty

Sensitivity Analysis and Validation of a Computational Framework for Supersonic Parachute Inflation Dynamics

The supersonic parachute inflation dynamics (PID) of the Advanced Supersonic Parachute Research (ASPIRE) SR03 parachute system, represented by a detailed computational model, are numerically simulated using a high-fidelity framework for fluid–structure interaction (FSI). Numerical results, in the form of representative quantities of interest, are validated against data from the ASPIRE SR03 flight test. The validation is performed on a predefined array of numerical simulations in order to investigate the robustness of these results and establish their sensitivities to identified critical modeling assumptions, including the resolution of the computational fluid dynamics mesh, the choice of the constitutive law for material modeling, and the choice of which physics to include. These sensitivities are evaluated with attention to their development and computational costs and to their associated uncertainties. The ultimate goal of the reported work is to pave the way for establishing best practices for the numerical simulation of supersonic PID and to advance the potential role of computational FSI in the design and evaluation processes of aerodynamic decelerator systems in general.