Making the most of High Inflation

Wojciech Charemza, Svetlana Makarova () and Imran Hussain Shah

No 13/01, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: 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.

Keywords: High Inflation Episodes; Real Effects Indicators; Developing Countries; Impulse Response Analysis (search for similar items in EconPapers)
JEL-codes: E31 N15 O11 (search for similar items in EconPapers)
Date: 2013-01
New Economics Papers: this item is included in nep-mac and nep-mon
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Related works:
Journal Article: Making the most of high inflation (2015)
Working Paper: Making the Most of High Inflation (2013)
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