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Making the Most of High Inflation

Charemza, WW; Makarova, S; Shah, I; (2013) Making the Most of High Inflation. (Economics and Business Working Paper 124). Centre for Comparative Economics, SSEES, UCL: London, UK. Green open access

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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.

Type: Working / discussion paper
Title: Making the Most of High Inflation
Open access status: An open access version is available from UCL Discovery
Publisher version: http://www.ucl.ac.uk/ssees/publishing/economics-an...
Language: English
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > SSEES
URI: https://discovery.ucl.ac.uk/id/eprint/1392057
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