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Inflation, taxes, and the durability of capital

Cohen, Darrel; Hassett, Kevin A. - Federal Reserve Board (Board of Governors of the … - 1997

Auerbach (1979, 1981) has demonstrated that inflation can lead to large inter-asset distortions, with the negative effects of higher inflation unambiguously declining with asset life. We show that this is true only if depreciation is treated as geometric for tax purposes. When depreciation is...

Persistent link: https://www.econbiz.de/10005393741

The magnitude and cyclical behavior of financial market frictions

Levin, Andrew T.; Natalucci, Fabio M.; Zakrajsek, Egon - Federal Reserve Board (Board of Governors of the … - 2004

We quantify the cross-sectional and time-series behavior of the wedge between the cost of external and internal finance by estimating the structural parameters of a canonical debt-contracting model with informational frictions. For this purpose, we construct a new dataset that includes balance...

Persistent link: https://www.econbiz.de/10005513094

Real exchange rates and inflation in exchange-rate based stabilizations: an empirical examination

Kamin, Steven B. - Federal Reserve Board (Board of Governors of the … - 1996

Considerable research has focused on explaining why currencies appreciate in real terms after the nominal exchange rate is stabilized, but this research generally has taken a theoretical approach, and rarely has tested its hypotheses empirically. In this paper I estimate a simple...

Persistent link: https://www.econbiz.de/10005368141

Optimal inflation persistence: Ramsey taxation with capital and habits

Chugh, Sanjay - Federal Reserve Board (Board of Governors of the … - 2005

Ramsey models of fiscal and monetary policy with perfectly-competitive product markets and a fixed supply of capital … that incorporates capital accumulation and habit persistence predicts highly persistent inflation. The result depends on … habit and capital on inflation persistence and also relate our findings to recent work on optimal fiscal policy with …

Persistent link: https://www.econbiz.de/10005368152

Some evidence on the efficacy of the UK inflation targeting regime: an out-of-sample forecast approach

Huh, Chan - Federal Reserve Board (Board of Governors of the … - 1996

Inflation targeting (IT)--a policy framework that directly targets an explicit inflation goal--has gained widespread attention recently as it has been adopted by several OECD countries. There is a growing body of literature on the ultimate long-term benefits of price stability and on theoretical...

Persistent link: https://www.econbiz.de/10005368189

Modelling inflation in Australia

Brouwer, Gordon de; Ericsson, Neil R. - Federal Reserve Board (Board of Governors of the … - 1995

This paper develops an empirically constant, data-coherent, error correction model for inflation in Australia. The level of consumer prices is a mark-up over domestic and import costs, with adjustments for dynamics and relative aggregate demand. We address issues of cointegration, general to...

Persistent link: https://www.econbiz.de/10005368204

Output and inflation in the long run

Ericsson, Neil R.; Irons, John S.; Tryon, Ralph W. - Federal Reserve Board (Board of Governors of the … - 2000

Cross-country regressions explaining output growth often obtain a negative effect from inflation. However, that result is not robust, due to the selection of countries in sample, temporal aggregation, and omission of consequential variables in levels. This paper demonstrates some implications of...

Persistent link: https://www.econbiz.de/10005368216

Tradeoffs between inflation and output-gap variances in an optimizing-agent model

Erceg, Christopher J.; Henderson, Dale W.; Levin, Andrew T. - Federal Reserve Board (Board of Governors of the … - 1998

We demonstrate the existence of a monetary policy tradeoff between price-inflation variability and output-gap variability in an optimizing-agent model with staggered nominal wage and price contracts. This variance tradeoff is absent only in the special case in which prices are sticky and wages...

Persistent link: https://www.econbiz.de/10005368225

The Great Inflation of the 1970s

Collard, Fabrice; Dellas, Harris - Federal Reserve Board (Board of Governors of the … - 2004

Was the high inflation of the 1970s mostly due to incomplete information about the structure of the economy (an unavoidable mistake as suggested by Orphanides, 2000)? Or, to weak reaction to expected inflation and/or excessive policy activism that led to indeterminacies (a policy mistake, a...

Persistent link: https://www.econbiz.de/10005368232

Price level convergence, relative prices, and inflation in Europe

Rogers, John H. - Federal Reserve Board (Board of Governors of the … - 2001

If price levels are initially different across the euro area, convergence to a common level of prices would imply that inflation will be higher in countries where prices are initially low. Price level convergence thus provides a potential explanation for recent cross-country differences in...

Persistent link: https://www.econbiz.de/10005368283

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