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AbstractThis paper investigates the relationship between inflation and inflation volatility. Using annual data from 1688 to 2009, the results show that UK inflation and its volatility have been positively correlated when inflation exceeds a certain value, but negatively correlated when inflation is below this threshold. The evidence also suggests that the break in the relationship occurs between annual inflation rates of 0.6% and 5.5%, which includes both the 2% inflation target of many central banks, and the 3.5% break point predicted by the New Keynesian model of Coibionet al. (2012).

With Michigan final June survey out, we have this picture: Figure 1: Year-on-year actual CPI inflation (bold black), and expected inflation from University of Michigan (red), NY Fed (light green), Survey of Professional Forecasters (blue +), Coibion-Gorodnichenko SoFIE mean (sky blue squares), and unit cost growth rate (chartreuse), all in %. Source: BLS, U.Michigan via FRED, Philadelphia […]

Through June: A comparison of conventional year-on-year vs. instantaneous. Figure 1: Food at home CPI component, y/y (blue), instantaneous per Eeckhout (2023), T=12, a=4 (red). Source: BLS and author's calculations. The Midwest and subregion East North Central (which includes Wisconsin) are showing modest declines q/q. Figure 2: Food at home component of CPI national (blue), […]

Inflation has been well contained over the last decades in most industrialized countries. This implies, however, that memories of high inflation are likely to fade, because over time larger parts of the population have never experienced high inflation, whereas those who have might forget. This paper tests whether memories of high inflation affect agents' preferences about the importance attached to price stability, using a large database covering over 50,000 survey responses from 23 countries over the years 1981-2000. It finds that memories of hyperinflation are there to last, whereas those of less drastic inflation experiences tend to erode after around 10 years. The recent decline in the importance attached to price stability does therefore most likely reflect mitigated inflation concerns in an environment of low and stable inflation, but also the consequences of fading memories of high inflation. The longer central banks have successfully delivered price stability, the more important it is for them to engage in a pro-active communication, especially with the younger generations, about the merits of low and stable inflation. [Copyright Elsevier B.V.]

"Today's global economy, with most developed nations experiencing very low inflation, seems a world apart from the "Great Inflation" that spanned the late 1960s to early 1980s. Yet, in this book, Brigitte Granville makes the case that monetary economists and policymakers need to keep the lessons learned during that period very much in mind, lest we return to them by making the same mistakes we made in the past. Granville details the advances in macroeconomic thinking that gave rise to the "Great Moderation"--A period of stable inflation and economic growth, which lasted from the mid-1980s through the most recent financial crisis. She makes the case that the central banks' management of monetary policy--hinging on expectations and credibility--brought about this period of stability, and traces the roots of this success back to the eighteenth-century foundations of modern monetary thought. Tackling fundamental questions such as the causes of inflation and its relation to unemployment and growth, the natural rate of inflation hypothesis, the fiscal theory of the price level, and the proper goals of central banks, the book aims above all to demonstrate the dangers of forgetting the role of credibility in establishing sound monetary policy. With the lessons of the past firmly in mind, Granville presents stimulating ideas and proposals about inflation-targeting principles, which provide tools for present-day monetary authorities dealing with the forces of globalization, mercantilism, and reserve accumulation."--Publisher's website.

AbstractThis paper presents further empirical support for the finding that the impact of inflation and that of policy instruments to manage inflation are not distributed equally across households of different income groups. In particular, the evidence using South African data suggests that monetary policy tightening, which seeks to maintain low and stable inflation, has a relatively modest effect on real consumption of poorer households, who tend to rely on government grants and spend larger shares of income on food stuff, while the reduction in real consumption of wealthier households is much larger. This may be due to the fact that low and stable inflation help maintain the value of government grants and cap food prices both in real terms, and higher interest rates reduce labour income, weaken asset price performance and increase debt service cost.

There is currently a policy debate on potential refinements to monetary policy regimes in countries with low and stable inflation such as the U.S. and Canada. For example, in Canada, a systematic review of the current inflation targeting framework is underway. An issue that has generally received relatively less attention in this debate is the redistributional effects of inflation. This omission is likely to be important since the welfare costs of inflation depend not only on aggregate effects but also on redistributional consequences. The goal of this paper is to contribute to this policy debate by assessing the redistributional effects of inflation in Canada that arise through the revaluation of nominal assets and liabilities.We find that the redistributional effects of inflation are sizeable even for low and moderate inflation episodes. The main winners are young middle-class households with substantial amounts of mortgage debt. Besides young households, inflation also represents a windfall gain for the government because of its long-term debt. Old households, rich households, and the middle-aged middle-class lose from inflation, largely due to their sizeable holdings of bonds and non-indexed defined benefit pension assets.

The low and stable inflation is a recondition to reach a society welfare. In the other hand, the source of inflation in Indonesia not only comes from the government that can be controlled by Bank Indonesia, but also from the demand side. So, the inflation manager needs a cooperation and coordination across instances, that is Bank Indonesia and government. The government and Bank Indonesia transformed an inflation monitor and control team at the central level on 2005, the strengthening coordination is continued by establishing the regional inflation control team (TPID) on 2008. In order to control and reduce the inflation, it is needed to have a strategic plans through a cooperation of regional institution by establishing the regional inflation control team (TPID) of Blitar District in which it will work to maintain the inflation in Blitar District. So, this research aims to know how is the work management that is implemented by TPID Blitar District on controlling the inflation. According to research hypothesis, how is the work management of TPID Blitar District on controlling the work management in Blitar District?. This research is filed research which uses a quantitative descriptive approach. The research subjects of this research are the secretary and TPID member of Blitar District. The data from this research is collected by observation, interview, and documentation technique which is validated by using triangulation source, then it is analysed through reduction, display, and conclusions stages. The research shows that work management of TPID Blitar District on controlling inflation is based on the inflation control guidance which set through governor regulations number 10 year 2015. TPID Blitar District has been implemented management functions indirectly, because the inflation control process that is done by TPID Blitar District has been in line with planning, organising, implementing and controlling function. The management of inflation control which is done by TPID Blitar District has been successfully enough in which the inflation in Blitar District is relatively controlled and stable. Thus, the researcher conclude that the management of inflation control that is done by TPID Blitar District is effective enough with the contribution that they managed to achieve as like as TPID goals.

In a historical perspective, the stabilization policy regime in Sweden is in a state of constant change, affected by economic crises, international impulses, domestic politics, and developments in macroeconomic theory. Economists have been deeply involved in this process. The current framework for monetary and fiscal policy, with an independent central bank focusing on inflation targeting, and a rule-based fiscal policy, is not the final stage of this process. Future crises will once again change the goals, the instruments, and the institutional framework. In a historical perspective, the rapid expansion of the financial system, with the accompanying accumulation of private debt and high rates of asset inflation, stands out as a likely cause behind the next crisis. The next crisis will be followed by yet another step in the perennial pursuit of a better stabilization policy.