The purpose of this study is to investigate the impact of exchange rate misalignment on inflation persistence. For this purpose, Vector Auto Regression method and Markov Switching model is used for quarterly data during 1989:4 -2014:3. The results show that, the impact of liquidity growth and exchange rate misalignment on inflation persistence is positive. On the other hand, GDP growth has a ne...

Monetary authorities have often voiced their concerns about a high debt level that could potentially restrain their ability to control the short-term interest rate as an instrument of monetary policy. However, monetary policy rules in the literature do not account for such constraints. This paper derives an augmented interest rate rule in which the response of the interest rate to expected infl...

This paper investigates the extent to which stocks of Building materials firms listed in Nigerian Stock Exchange (NSE) are a hedge against the expected and unexpected inflation in Nigeria over the period 2000–2011. Unexpected inflation is computed as the difference between the actual inflation and the estimates of the expected inflation. The study used real rate of return on equity and regressi...

There have been two broad theories of inflation, namely the demand-pull theory of inflation (that is nowadays mainly the monetary theory of inflation) and the cost-push theory of inflation. The mainstream macroeconomics views inflation as a monetary phenomenon in the long run. Iran has experienced double-digit rates of inflation for about four decades. Our main aim is an explanation for the lon...

It is widely acknowledged that the Fed can control the average inflation rate over a period of time reasonably well. Because of this and the Federal Open Market Committee’s (FOMC’s) long-standing commitment to price stability, the author argues that the FOMC has an implicit long-run inflation objective (LIO)—lower and upper bounds to the long-run inflation rate. He shows that the statements mad...

Changes in nominal interest rates must be due to either movements in real interest rates, expected inflation, or the inflation risk premium. We develop a term structure model with regime switches, time-varying prices of risk, and inflation to identify these components of the nominal yield curve. We find that the unconditional real rate curve in the U.S. is fairly flat around 1.3%. In one real r...

The central banks of New Zealand, Canada, and the United Kingdom have recently decided to make price stability the overriding goal of monetary policy. Similar proposals in the United States have received a lukewarm reception. Although some opponents have argued that moderate inflation is beneficial, many concede its effect on economic welfare is detrimental.1 Instead, they argue that a price st...

this study investigates the effects of two policies of reducing profit rate and increasing supply of credits on the growth of production in the economic sectors in iran. to achieve the goal, the orani-g computable general equilibrium model was modified tothe present situation of iranian economy. the model was also extended to accommodate the financial sector of the economy. to use the cge model...