The steady inflation rate of economic growth

Date

Authors

Dungey, Mardi
Pitchford, John

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Publisher

Canberra, ACT: Centre for Economic Policy Research (CEPR), The Australian National University

Abstract

This paper considers the existence of a path of GDP corresponding to steady inflation in the prices of domestic goods. We estimate the steady inflation rate of growth, denoted the SIRG, at a little over 4 per cent per annum in the post-float period. Changes in inflation are modelled as a nonlinear combination of growth and changes in import price inflation. Because import price inflation is more volatile than overall inflation, policy that targets overall inflation may require growth to fluctuate considerably, whereas growth can be steady if the target is steady inflation of domestic goods’ prices.

Description

Keywords

inflation, growth, import prices, monetary policy

Citation

Source

Type

Working/Technical Paper

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Access Statement

Open Access

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