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Making the Most of High Inflation

Wojciech Charemza (), Svetlana Makarova () and Imran Hussain Shah

No 124, UCL SSEES Economics and Business working paper series from UCL School of Slavonic and East European Studies (SSEES)

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: 2013-04
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Journal Article: Making the most of high inflation (2015) Downloads
Working Paper: Making the most of High Inflation (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:see:wpaper:2013:124

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