In this paper, we propose a stochastic investment model for actuarial use in South Africa by modelling price inflation rates, share dividends, long-term and short-term interest rates the period 1960–2018 inflation-linked bonds 2000–2018. Possible bi-directional relations between economic series have been considered, parameters their confidence intervals estimated recursively to examine stabilit...

This paper reexamines the implications of the zero lower bound on interest rates for monetary policy and the optimal choice of steady-state inflation in light of the experience of the recent global recession. There are two main findings. First, the zero lower bound did not materially contribute to the sharp declines in output in the United States and many other economies through the end of 2008...

In a discretionary regime the monetary authority can print more money and create more inflation than people expect. But, although these inflation surprises can have some benefits, they cannot arise systematically in equilibrium when people understand the policymaker’s incentives and form their expeziations accordingly. Because the policymaker has the power to create inflation shocks ex pest, th...

A prominent policy issue of the 1970s and one that seems certain to dominate the early 1980s is the appropriate response to a prevailing high rate of inflation. The view that there is a long-run trade-off between inflation and unemployment, widely accepted at the end of the sixties, is now held by only a small minority of economists. It is still widely believed, however, that there is a short-r...

We inspect how inflation target announcements are instrumental in building central bank credibility and shaping the public’s inflation expectations. Investigating the role of announcements in two early adopters of inflation targeting by using a time varying credibility measure, we find that both the accuracy and the frequency of inflation announcements have a positive impact on how much attenti...

One of the main empirical conclusions of the political business cycle literature is that economic growth and employment in the United States tend to fall after the election of a Republican administration, and increase following Democratic victory. Because Republican administrations also exhibit lower interest rates and inflation than Democrats, it has been argued that their constituents favor l...

Southern timber harvesting equipment and on-road vehicle costs were obtained for the years from 1967 to 1984. Average cost trends for equipment and vehicles were determined for the period. Average logging contract rates and price trends were also estimated. Comparisons indicated that equipment costs increased more than the general inflation rate and less than the prices of other industrial comm...

We determine optimal discretionary monetary policy in a New-Keynesian model when nominal interest rates are bounded below by zero. Nominal interest rates should be lowered faster in response to adverse shocks than in the case without bound. Such ‘preemptive easing’ is optimal because expectations of a possibly binding bound in the future amplify the e ects of adverse shocks. Calibrating the mod...

This study provides cross country robust evidence on interdependencies among inflation, output growth and respective uncertainties for the current era of low inflation policies. We attribute the extant empirical disagreement on these relations to the fact that long sampling periods and single economies are typically considered for analysis. In this study, VARX-MGARCH-M models are estimated for ...

Following their EU accession, the new member countries from Central and Eastern Europe (CEE) must achieve sustainable price stability as one of the pre-conditions for joining the Economic and Monetary Union (EMU) and adopting the euro. This paper examines the distribution dynamics of inflation rates in ten EU members from CEE relative to the EMU accession benchmark inflation over the period 199...