The paper analyses inflationary real effects in situation where there are frequent episodes of high inflation. It is conjectured with the increase in high inflation, and when differences between the expected and output-neutral inflation become large, output stimulation through inflationary shocks is more effective than otherwise. It is shown that this conjecture is valid for most countries with high inflation episodes, where inflation is greater than 4.8% for at least 25% of quarterly observations. This leads to a simple policy prescription that anti-inflationary monetary decisions should be undertaken in periods where the expected inflation exceeds output-neutral.
|Number of pages||22|
|Publication status||Unpublished - Jul 2013|
|Event||EcoMod 2013: International Conference on Econcomic Modelling - Prague, Czech Republic|
Duration: 1 Jul 2013 → 3 Jul 2013
|Conference||EcoMod 2013: International Conference on Econcomic Modelling|
|Period||1/07/13 → 3/07/13|
Charemza, W. W., Makarova, S., & Shah, I. (2013). Frequent episoded of high inflation and real effects. Paper presented at EcoMod 2013: International Conference on Econcomic Modelling, Czech Republic.