International Transmission Of Inflation Research Articles

An Empirical Study on International Transmission Path of Inflation in China

In the background of economic globalization and integration, a country's economy will move from closing to opening. While sharing the benefits of this opening economy, it will also bear the negative effects, including "international transmission of inflation" which deserves the widespread concern. With the in-depth development of China's economic reform, China is gradually transferring from a closed economy to an open one. According to the cause of inflation from 2003 to 2007, it cannot be fully attributed to domestic factors. The new domestic inflation from 2010 to 2011 is closely related to the input factors and until the current macroeconomic inflation expectations are obvious. This paper aims to make an empirical study on the data from 2003 to 2012, and to analyze how smooth the international transmission paths of inflation in China.

EXCHANGE RATE FLEXIBILITY, CAPITAL MOBILITY AND INFLATION TRANSMISSION IN MALAYSIA

The paper assesses the international transmission of inflation for a small economy, Malaysia, over three sample periods marked by different degrees of exchange rate flexibility. Contradicting to conventional wisdom of less pronounced foreign nominal influences under the flexible exchange rate regime, this research finds evidence that the inflation transmission from the US to Malaysia is strongest during the period marked by increasing exchange rate flexibility (i.e. 1993-1998). This research also observes significant inflation effects of exchange rate depreciation during the same period. While this research observe less pronounced impacts of the US during the limited exchange rate flexibility period (i.e. 1988-1999), the US influences are virtually absent during the recent fixed regime (i.e. 1998-2005). This research believes that the intensity of capital flows across the three periods might have explained the results.

Economic Integration and Union Power

The standard utility-maximizing model of the trade union in a closed economy is reformulated for an environment where economic integration is under way or expected to occur soon. In the (European) realistic setting of union-dominated labor markets, domestic wages are shown to be affected by labor market developments abroad. This article provides an explanation of the international transmission of inflation and disinflation

International transmission of inflation under alternative exchange rate regimes: Empirical evidence and its implications

This is a study of the transmission pattern of inflation under alternative exchange rate regimes, fixed and flexible, among the Group of Seven (G-7) countries and their subsets, including four members of the European Union (EU) and two countries from North America. Our key empirical findings are as follows. The price levels of several countries that we found move together as a cointegrated system, forming an equilibrium relationship under both fixed and flexible exchange regimes. Second, the speed of adjustment estimates show that the transmission of inflationary disturbances across countries is less pronounced under the flexible exchange rate regime than under the fixed exchange rate regime. Third, the US was found to be the main producer of inflationary innovations among G-7 countries, whereas the UK was found to be the main producer of inflationary innovations among the EU countries, regardless of exchange rate regime.

Selected Essays of Gottfried Haberler.

Gottfried Haberler's contributions to the field of international trade and finance began in the 1920s with a seminal paper on comparative costs. His continuing contributions to open economy analysis, development, business cycles and inflation, the theory of money, and rational expections are highlighted in this selection of 27 essays spanning the years 1925 to 1980.The essays are divided into five major sections, representing the subdisciplines of Haberler's most significant work. The first section on international trade contains his work on comparative costs, comparative advantage, and the location of production and international trade. A section on international finance deals with the state of the international monetary system under conditions of world recession, control over international reserve, U.S. balance-of-payments policy, currency depreciation and the terms of trade, and transfer and price movements. The topic of inflation and business cycles is covered in the third section, with essays on income policies, stagflation, and the Great Depression, and the international transmission of inflation. Section four deals with economic development, and the concluding section contains essays on the theory of money and general macroeconomic theory. Several articles are translated here for the first time and there is a complete bibliography of Haberler's work up to 1980.Gottfried Haberler is Professor Emeritus of Economics, Harvard University, and Resident Scholar at the American Enterprise Institute. Anthony Koo is Professor of Economics at Michigan State University.

The Role of Exchange Rate Flexibility in the International Transmission of Inflation in Long and Shorter Runs: Canada, 1953 to 1981

The Role of Exchange Rate Flexibility in the International Transmission of Inflation in Long and Shorter Runs: Canada, 1953 to 1981

Money and Prices in a Small Economy

A simple rational expectations version of the quantity theory is applied to recent monthly and quarterly Finnish data on prices, money and related variables. It is found that, apparently because of sufficient flexibility of the exchange rate, money precedes income with a lead of up to eight quarters. In sharp contrast with previous Phillips-curve models, the Bank of Finland's stable money-supply policy causes a negative relationship between inflation and real activity. When contrasted with models based on international transmission of inflation over fixed exchange rates, the monetary model performs surprisingly well. The results appear to indicate greater monetary autonomy than that suggested by previous studies.

The international transmission of inflation: A review essay

The international transmission of inflation: A review essay

The International Transmission of Inflation.

Inflation became the dominant economic, social, and political problem of the industrialized West during the 1970s. This book is about how the inflation came to pass and what can be done about it.

The International Transmission of Inflation

Inflation became the dominant economic, social, and political problem of the industrialized West during the 1970s. This book is about how the inflation came to pass and what can be done about it. Certain to provoke controversy, it is a major source of new empirical information and theoretical conclusions concerning the causes of international inflation. The authors construct a consistent data base of information for eight countries and design a theoretically sound model to test and evaluate competing hypotheses incorporating the most recent theoretical developments. Additional chapters address an impressive variety of issues that complement and corroborate the core of the study. They answer such questions as these: Can countries conduct an independent monetary policy under fixed exchange rates? How closely tied are product prices across countries? How are disturbances transmitted across countries? "The International Transmission of Inflation" is an important contribution to international monetary economics in furnishing an invaluable empirical foundation for future investigation and discussion.

The International Transmission of Inflation

Inflation became the dominant economic, social, and political problem of the industrialized West during the 1970s. This book is about how the inflation came to pass and what can be done about it. Certain to provoke controversy, it is a major source of new empirical information and theoretical conclusions concerning the causes of international inflation. The authors construct a consistent data base of information for eight countries and design a theoretically sound model to test and evaluate competing hypotheses incorporating the most recent theoretical developments. Additional chapters address an impressive variety of issues that complement and corroborate the core of the study. They answer such questions as these: Can countries conduct an independent monetary policy under fixed exchange rates? How closely tied are product prices across countries? How are disturbances transmitted across countries? The International Transmission of Inflation is an important contribution to international monetary economics in furnishing an invaluable empirical foundation for future investigation and discussion.

The International Transmission of Inflation

The International Transmission of Inflation

The timing of monetary and price changes and the international transmission of inflation

This paper presents a theoretical and empirical investigation into timing relationships between variables within and across industrialized countries. The main empirical results of our analysis are: (1) Domestic monetary expansion appears to lead inflation in the sense that money Granger-causes prices without feedback, contradicting an implication of the monetary approach to the balance of payments. (2) Hardly any significant timing relationship exists between domestic and foreign rates of inflation during the fixed exchange rate period, providing no evidence for a generalized ‘law of one price’. (3) Some sterilization of official reserve inflows was successfully performed by the non-reserve central banks, except for Canada. (4) U.S. interest rates Granger-cause foreign rates, providing evidence of some international transmission via asset markets.

A note on the international transmission of inflation: The impact of U.S. inflation on Mexico

This paper investigates the relative impact of U.S. inflation and domestic monetary factors on the joint determination of inflation and the balance of payments of Mexico between 1950 and 1979. It also tests the hypothesis that the U.S. money supply has an additional, direct impact on Mexico's balance of payments.

Purchasing power parity under fixed and flexible exchange rates

The relationship between exchange rates and relative price levels in a sample of fourteen countries is studied for periods of fixed and of floating exchange rates. In comparing the deviations of the exchange rates from their purchasing power parity levels in the two cases it turns out that both the average size of the divergencies and their duration are smaller under the fixed rate period 1957–1966 than under the recent period of floating rates. The adjustable beg years of the late sixties fall in between. Evidence is also found which indicates a bias in purchasing power parity calculations using consumer price indexes, and the hypothesis that purchasing power parity relationships shifted as a result of changes in relative prices occuring at the end of 1973 cannot be rejected. The findings are related to the empirical literature on the international transmission of inflation and to recent comparisons of exchange rates and relative inflation rates.

Competition and the international transmission of inflation

Exposure to foreign competition is generally recognized to affect a country's export price. In so-called ‘Scandinavian’ models the exposure to foreign competition on domestic markets is introduced as an element in explaining domestic prices. In this paper the authors demonstrate the effects of the introduction of the latter type of exposure into the Mini-Meteor model, which is a comprehensive international economic model with world-wide coverage, rather than the single-country models into which domestic exposure has been introduced so far. The exposure to foreign competition on domestic markets leads to a partial loss for producers in independent pricing policies on these markets. This results in a lower domestic multiplier for domestic inflationary impulses, whereas the multiplier abroad is higher than would otherwise be the case. As compared to the isolated country model as it sits in Mini-Meteor, the comprehensive model will show feedback effects from abroad. The isolated country model will thus underestimate the effects of domestic inflationary impulses if exposure to foreign competition exists on domestic markets. A final conclusion is that the effects of world-wide inflationary impulses will be spread more evenly amongst countries if exposure on domestic markets exists.

The Price Effects of Exchange Rate Changes: Models, Empirical Evidence, and Notes on Aggregation Bias

The recent concurrence of rapid domestic prices increases with large par value adjustments and volatile floating rates has rekindled an interest in the international transmission of inflation. In particular, there has been a call to remodel the process of domestic inflation in a manner which highlights "the internationally traded goods, whose prices (adjusted for trade barriers) must be everywhere the same."