This study aims to examine the movement of macroeconomic variables, especially inflation and exchange rates. Inflation affects rate through Law One Price Purchasing Power Parity, while Exchange Rate Pass-Through Effect. also effect other factors on The variables studied suspected influencing are interest rates, money supply, exports, imports, government spending, unemployment, While difference ...

A similar negative correlation between inflation and stock prices prompted Modigliani and Cohn to conjecture that investors are prone to money illusion: they confuse nominal and real interest rates. When that is the case investors mistakenly discount real future cash flows with the nominal interest rate (or alternatively ignore the fact that cash flows tend to grow in nominal terms as inflation...

ECENT fears of increased future inflationary pressures, heightened by high rates of capacity utilization, have generated a large body of commentary concerning what level of inflation would be desirable or at least acceptable.’ While there appears to be a general consensus that a rise in the rate of inflation is not desirable, whether or not many would agree with Mr. Greenspan’s statement above ...

T he Federal Reserve has made significant progress toward price stability over the last two decades. The annual inflation rate has declined from 13 percent in the early 1980s to roughly 2 percent today. The current environment of low and stable inflation has fostered superior economic performance. Lower inflation has led to lower interest rates, which in turn have helped spur investment, foster...

New Keynesian Phillips curves are widely used in macroeconomic policy models to simulate the inflation consequences of alternative monetary policies. The purely forward-looking inflation specification is appealing, because it is based on a model of optimal pricing behaviour. However, based on empirical evidence, the standard view is that there is considerable persistence in inflation. Consequen...