Can inflation targeting reduce price information asymmetry and alleviate corruptive behavior? Evidence from developing countries

This paper examines the role of inflation targeting as a price signaling mechanism reducing price information asymmetry and potentially reducing incentives for corruptive actions through its direct control on the inflation rate, thus simultaneously increasing institutional quality. The obtained evidence suggests that adopting inflation targeting lowers corruption in a sample of 61 developing countries for the period between 1990 and 2018. Countries that have adopted inflation targeting experience lower corruption levels, as measured by the corruption perceptions (CP) index, controlling for other relevant determinants of corruption identified in the empirical literature, such as inflation, level of income, income distribution, trade openness and the rule of law. This result is sensitive to the type of inflation targeting adopted. Soft (unofficial) inflation targeting has no significant effect on the corruption level, giving support to the claim that strong institutional commitment, accompanied by transparency and constant communication with regards to inflation targets by the central bank, provides an adequate price signaling mechanism. In addition, the analysis provides evidence that an efficient rule of law reduces corruption levels significantly, although its effects are rather modest to support the claims that it can solely lessen corruptive behavior in the sample of developing countries.     

中国转型期通货膨胀对城乡收入差距的影响——基于省际面板数据的分析

本文利用我国31个省市区1979～2009年的面板数据,在运用面板数据门限模型检验我国的通货膨胀率、预期到的通货膨胀率和未预期到的通货膨胀率对城乡收入差距的影响都不存在门限效应的基础上,采用面板数据可行广义最小二乘进行估计。结果发现,我国的通货膨胀率和未预期到的通货膨胀率都扩大了城乡收入差距且是稳健的,但扩大的程度因所用数据的时间长短而异;而预期到的通货膨胀率影响城乡收入差距系数的符号和大小都因数据的时间长短而变化。     

Inflation,financial development,and growth: A trilateral analysis

A large body of evidence links financial development to economic growth, yet the channels through which inflation affects this relationship and its stability have been less thoroughly explored. We take an econometric and graphical approach to examining these channels, and find that higher levels of financial development, combined with low-inflation, are related to higher rates of economic growth, especially in lower income countries, but that financial development loses much of its explanatory power in the presence of high-inflation. In particular, small increases in the price level seem able to wipe out relatively large growth effects of financial deepening when the annual rate of inflation lies between 4% and 19%, whereas the operation of the finance–growth link is less affected by inflation rates above this range. Growth is generally much lower, however, in such high-inflation settings where financial development is typically repressed.     

Residual Income Valuation Models and Inflation

Existing empirical evidence suggests that residual income valuation models based on historical cost accounting considerably underestimate equity values. One possible explanation is the use of historical cost accounting under inflationary conditions. In this paper, we use a residual income framework to explore theoretically how historical cost accounting numbers need to be adjusted for inflation in forecasting and valuation. We demonstrate that even in a simple setting where inflation is running at a relatively low level, residual income models are likely to produce severe under-valuations if inflation is not properly taken into account. We use simulated data to reinforce our theoretical findings and to illustrate the difficulties that empirical investigators face working within the confines imposed by real data.     

Uncovering financial markets' beliefs about inflation targets

This paper exploits the term structure of interest rates to develop testable economic restrictions on the joint process of long‐term interest rates and inflation when the latter is subject to a targeting policy by the central bank. In an empirical application to the Canadian inflation target zone, results indicate that financial markets perceive the band to be of approximately the same width as announced but asymmetrically distributed around the official target. This finding suggests that, in practice, the monetary authority might attach different weights to positive and negative inflation deviations from the target. Copyright © 2000 John Wiley & Sons, Ltd.     

浅议我国现行个人所得税制改革

个人所得税作为调节居民收入分配的一个重要税种,在我国经济生活中起着至关重要的作用。个税调整直接关系百姓钱袋子,在通胀形势下成为关注热点。随着我国经济的增长,居民可支配收入也在逐年增多,但是作为调节贫富收入差距的"个人所得税"这一税收杠杆却滞后于我们经济的变化,这些问题不仅严重影响了税收调节经济的功能,而且对社会稳定也极为不利。本文在阐明了我国个人所得税制改革中存在的相关问题后,有针对性的提出了相关学者的政策建议。     

Asymmetric Quantile Persistence and Predictability: the Case of US Inflation

This article investigates the evidence of time‐variation and asymmetry in the persistence of US inflation. We compare the out‐of‐sample performance of different forecasting models and find that quantile forecasts from an Auto‐Regressive (AR) model with level‐dependent volatility are at least as accurate as the forecasts of the Quantile Auto‐Regressive model, in particular for the core inflation measures. Our results indicate that the persistence of core inflation has been relatively constant and high, but it declined for the headline inflation measures. We also find that the asymmetric persistence of inflation shocks can be mostly attributed to the positive relation between inflation level and its volatility.     

If ‘money matters’, what about the monetary base?

Crucial to the debates on monetarism is the money aggregate relevant to its key propositions, in particular those that relate to the determination of nominal national income and inflation. In his influential work on ‘market monetarism’, Scott Sumner has accorded a privileged position to the monetary base in the key monetarist propositions. This article argues that, on the contrary, in a modern economy the role of cash is so small, as well as so clandestine, that the monetary base does not play any direct role in the determination of national income and inflation.     

物价上涨对不同收入群体消费支出的影响分析——以广东省为例

为了考察物价上涨对居民生活的影响,本文以广东省为例,从短期和长期两个方面对不同收入层城镇居民的消费支出变动情况进行了实证分析。结果表明,从短期看,物价上涨使城镇不同收入层居民的消费支出出现不同程度的增加,但低收入层居民消费性支出的增长幅度最大,普遍高于其他收入层居民。从长期看,物价上涨对城镇不同收入层居民消费支出的影响方向和程度不尽相同,其中使低收入户、中低收入户和高收入户的支出增加,而使中等收入户和中高收入户的支出减少。但是,无论是从长期还是从短期看,物价上涨对低收入户的影响最大,其消费性支出的增长幅度均高于其他收入群体的支出增长幅度。     

我国通货膨胀的收入分配效应分析

从理论和经验上研究了我国通货膨胀的收入分配效应。根据我国经济社会特征,通货膨胀具有调节城乡之间、不同体制企业之间和不同地区之间的收入差距的效应。对代表收入差距的基尼系数去趋势后的实证分析表明,通货膨胀可部分解释基尼系数的波动成分,其趋势成分由经济增长等因素决定。     

Household migration: theoretical and empirical results

A consumption theory of migration is developed which supplements the traditional job search models. Migration, seen as an equilibrating reaction to an initially non-optimal location, is analyzed using standard demand theory. When one groups goods into those that are traded between areas and those that are not (weather, racial discrimination, crime rates, etc.) it is clear that only changing demands for the non-traded goods will result in changing optimal locations (assuming supplies are fixed). Illustrating, an increase in family income might lead to an increased demand for the non-traded good “personal safety.” This might result, for example, in the substitution (through migration) of a lower crime suburban neighborhood for a higher crime central city neighborhood.An empirically testable implication of the model is that the probability of migration should be positively related to changes in the absolute value of those exogenous variables which lead to altered demands for non-traded goods. This and other hypotheses were examined using cross-sectional data in a nonlinear maximum likelihood (probit) regression analysis. The results strongly support the model and its implications.     

Testing for optimal monetary policy via moment inequalities

The specification of an optimizing model of the monetary transmission mechanism requires selecting a policy regime: commonly, commitment or discretion. In this paper we propose a new procedure for testing optimal monetary policy, relying on moment inequalities that nest commitment and discretion as two special cases. The approach is based on the derivation of bounds for inflation that are consistent with optimal policy under either policy regime. We derive testable implications that allow for specification tests and discrimination between the two alternative regimes. The proposed procedure is implemented to examine the conduct of monetary policy in the US economy.     

Income Level and Inflation Strain in the United States: 1971–1975

A bstract . Estimates of net inflationary effects in the United States from 1971 to 1975 are attempted by income level. The central concept is inflation strain , or the difference between the percentage change in prices and incomes as a percentage of change in incomes. Trends in prices are derived from United States Bureau of Labor Statistics data on lower and higher family budgets , admittedly subject to significant error, but the best we have. Equivalent income trends are estimated from data reported in the P-60 series of the United States Bureau of the Census. Two findings are indicated. The first is that both higher and lower budget families experienced inflation strain, although the strain, of course, was substantially greater for lower budget families. The second finding is that the primary source of strain for the lower budget families was food , whereas the primary source of strain for the higher budget family was taxes , both income and Social Security taxes. The richer are getting poorer more slowly than the poor. Limitations of the techniques and data are analyzed.     

Money,random matching and endogenous growth: A quantitative analysis

In this study, we develop a search-and-matching monetary growth model to analyze the effects of inflation on economic growth and social welfare by introducing endogenous economic growth via capital externality into a two-sector search-and-matching model. We find that the channel through which inflation affects economic growth in the search-and-matching model is different from the traditional cash-in-advance model. To facilitate the calibration, we obtain an empirical estimate of the effects of inflation on economic growth using panel regressions. In the simulation analysis, we quantitatively evaluate the welfare effect of inflation in the search-and-matching endogenous growth model and compare it to a search-and-matching exogenous growth model. We find that the welfare effect of inflation is nonlinear in the endogenous growth model whereas it is linear in the exogenous growth model. Furthermore, we find that the welfare cost of inflation under endogenous growth is up to four times as large as the welfare cost of inflation under exogenous growth.     

Uncertain inflation and social security indexation

This paper provides a theoretical analysis of the effects of the insurance feature of social security indexation on portfolio allocation and the stability of income and consumption of the retiree within the framework of a life-cycle model of allocation under uncertainty. The paper shows that the magnitudes of such effects depend on the importance of social security in total wealth, the covariance of real portfolio returns with the inflation rate and, more importantly, whether there exists market failure in providing for inflation insurance.     

Hungary on the Road to a Mixed Economy: A Kaleckian Computable General Equilibrium Approach

The change from a centrally planned economy into a market economy is likely to have created a unique situation in economic history. Consequently, no existing economy theory is able to depict the process of transformation. It is argued in this paper that a Kaleckian theoretical approach may provide a starting point for the analysis of the formerly centrally planned economies of Central and Eastern Europe. This approach is applied to Hungary, within the framework of a computable general equilibrium model. A number of policy measures, such as wage constraint, devaluation and mark-up reduction, are considered and their effects on production, inflation and income distribution assessed.     

Theory of social transformation,political transition and economic growth

In this paper, I develop a model of sociopolitical transition that links the sociopolitical transformational process of countries to the dynamic process of output per capita and economic growth. Social polarization breeds discriminatory practices regarding government redistribution. This brings about inefficient allocation of resources away from production to political power struggle, leading to poor economic outcomes. However, the model shows that social integrative processes may correct this inefficiency over time depending on the degree of social fractionalization, the level of social distance between the groups, the level of production technology, etc. Even though the model predicts long-run convergence of growth rates and output per capita across countries, it shows possible prolonged divergence of these economic variables.     

Time banditry: Examining the purloining of time in organizations

Time banditry, a variant of counterproductive work behavior, is defined as the propensity of employees to engage in non-work related activities during work time. We extend past research on time banditry in two ways. First, we develop a model of time banditry. It is posited that a significant number of employees engage in time banditry despite their level of engagement with their job and even when productivity levels remain at an acceptable level. Implications of the model are described and testable propositions are developed. Second, we suggest that time bandits as a group are not monolithic, but instead there are at least four types of bandits. Supervisors need to manage each type with different human resource management practices.     

Testing the New Keynesian Phillips Curve Through Vector Autoregressive Models: Results from the Euro Area*

This paper addresses the issue of testing the ‘hybrid’ New Keynesian Phillips curve (NKPC) through vector autoregressive (VAR) systems and likelihood methods, giving special emphasis to the case where the variables are non‐stationary. The idea is to use a VAR for both the inflation rate and the explanatory variable(s) to approximate the dynamics of the system and derive testable restrictions. Attention is focused on the ‘inexact’ formulation of the NKPC. Empirical results over the period 1971–98 show that the NKPC is far from providing a ‘good first approximation’ of inflation dynamics in the Euro area.     

What drives household inflation expectations in South Africa? Demographics and anchoring under inflation targeting

Demographic determinants (i.e., gender, income, education, race, age) of one year ahead inflation expectations in South Africa are explored. Surveys covering the period 2006–2016 are examined via a mix of time and cross-sectional methods. In doing so, we uncover clear behavioural biases in how respondents view the inflation outlook. Education and income tend to be inversely related to inflation expectations. This is consistent with the literature, although we observe significant changes over time that many other surveys are unable to uncover. Inflation expectations also respond to recently observed inflation, but this is likely facilitated by priming in the survey since respondents are given the previous year and five years mean inflation rates. Younger individuals have lower inflation expectations and react significantly to central bank communication, which is a novel variable not included in other studies of this kind. Another demographic characteristic interacting with communication by the South African Reserve Bank is race. Finally, the direction of change in inflation, that is, whether it is rising or falling, also matters. Hence, even if respondents are primed, they appear to be aware of changes in the direction of inflation. This represents an additional novel feature of the study.