), production and indirectly also employment. In the retail market the consumer price index (CPI) is formed. We specify a simple … dynamic model with two state variables: CPI and PPI. Real variables - production and employment - are fully determined by CPI … shocks to the PPI inflation, production and employment equations. In the second part we implement the model on monthly data …

household debt has increased in the past five years. The empirical analysis presented in the paper is based on the Life Cycle … have a significant impact on household consumption, and that consumption is acutely sensitive to disposable income. Our … models further confirmed the acute effect real interest rates have on household consumption. We ultimately concluded that …