The Steady Inflation Rate of Economic Growth

Mardi Dungey and John Pitchford

No 414, CEPR Discussion Papers from Centre for Economic Policy Research, Research School of Economics, Australian National University

Abstract: This paper considers the existence of a path of GDP corresponding to steady inflation in the prices of domestic goods. We estimate the steady inflation rate of growth, denoted the SIRG, at a little over 4 per cent per annum in the post-float period. Changes in inflation are modelled as a nonlinear combination of growth and changes in import price inflation. Because import price inflation is more volatile than overall inflation, policy that targets overall inflation may require growth to fluctuate considerably, whereas growth can be steady if the target is steady inflation of domestic goods' prices.

Keywords: inflation; growth; import prices; monetary policy (search for similar items in EconPapers)
JEL-codes: E31 E52 (search for similar items in EconPapers)
Pages: 32 pages
Date: 1999-12
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Journal Article: The Steady Inflation Rate of Economic Growth (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:auu:dpaper:414

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