Inflation targeting in a small open economy: empirical results for Switzerland

Article Abstract:

McCallum's (1987) nominal targeting rule is extended to a small open economy by allowing feedback from the exchange rate. A Markov switching model is used to estimate the parameters. It is claimed that a model of discrete parameter changes should be skillful in capturing sudden changes in policy regime. The Swiss monetary policy is examined by analyzing the legitimacy of an inflation targeting rule with exchange-rate feedback.

Research, Usage, Economic aspects, Switzerland, Markov processes

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Inflation and financial sector size

Article Abstract:

Increased inflation leads to expansion in the financial services industry. A cross-country comparison of inflation rates and financial sector size is analyzed along with other data. A 10% rise in inflation would allow the financial sector to account for 1.3% more of the US Gross Domestic Product. The impact of this growth is also discussed.

Financial Services, Finance and Insurance, Financial services industry, Influence

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Indexing and Inflation

Article Abstract:

A macroeconomic model is developed to determine the inflationary effect of indexation. All forms of indexation are found to increase the impact of any inflationary shock on the price level. The relationship is developed by government policy.

Laws, regulations and rules, National government, Federal government, Indexation (Economics)

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