Starting with the UK in 1981, many of the industrialized countries have issued long-term bonds whose principal value is indexed to the rate of inflation. One of the benefits that economists predicted from issuing such bonds is that the difference between the yield on indexed and nominal bonds...

The paper investigates the relationship between relative price movements and changes in the aggregate price level using monthly data on Finland’s Consumer Price Index and its components from the period covering the past eight and a half years. This was a period of very low inflation. The rate...

The financial turmoil that hit Russia in August 1998, was extremely confusing to many foreign observers working in Russia. It was astonishing to see a country that seemed on its way to prosperity suddenly experiencing an economic meltdown. As part of my work, I was often asked to provide...

This paper examines the combined influences of detrending and time aggregation on the measurement of business cycles. The approximate band- pass filter of Baxter and King (1999) performs relatively well in the sense that it retains the basic shape of disaggregate spectra and cospectra when...

This paper analyses the consequences of the Nixon Administration’s policy of wage-price controls and finds that the controls were essentially ineffective in reducing inflation.

The goal of this paper is to provide a fair empirical comparison of two alternative explanations of the relationship between aggregate price and output. We compare the empirical performance of the sticky price and the Mankiw and Reis (2002) sticky information models. We put both models in a...

During the decade of the 1970’s the US economy unexpectedly suffered from “stagflation” namely, high unemployment, slowed economic growth and high rates of inflation. During the 1980’s the major macroeconomic problem became high interest rates and massive government deficits....

We describe a class of monetary economies that generate persistent episodes of high and low inflation. In this class of economies, variations in expectations can lead private agents to take actions which then make it optimal for the monetary authority to validate those expectations. We think...

The determinants of money velocity are explored under various assumptions on interest rate uncertainty in a monetary general equilibrium model. It is found that the appearance of velocity function instability can be produced by overlooking interest rate stochastic volatility. In addition, when...

Mismeasurement of inflation is likely to be more severe in a transition economy than in a more stable environment. Reasonable estimates of the size of the inflationary bias in the Czech Republic suggest that conventionally reported declines in real output and living standards during the...