International macroeconomic interdependence, currency substitution, and price stickiness

Article Abstract:

The linkages that exist between the national money markets under currency substitution (CS) have been widely regarded as a means by which international monetary shocks are conveyed. The role of CS in the transmission of monetary shocks across economies is determined by incorporating the CS possibility into a two-country macroeconomic model. It is established that the conclusions regarding the consequences of CS may alter easily when it is taken within the context of an explicit macroeconomic framework. The presence of CS has also been determined as a possible factor in lessening the magnitude of the transmission effects of monetary disturbances.

Economic aspects, International aspects, Foreign exchange, Macroeconomics, International finance

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Survey measures of expected U.S. inflation

Article Abstract:

An analysis of three survey measures of US inflation expectations - the survey of households, the Livingston Survey of professional economists and the Survey of Professional Forecasters - indicates that consensus inflation forecasts of both economists and households generally outperform the naive and Fisher benchmark forecasts. This finding suggests a continuing process of observation and learning by economists and households that is not reflected in the simple benchmark forecasts. Consensus household inflation forecasts perform surprising well compared with those of the apparently better-informed professional economists.

Forecasts and trends, Inflation (Finance), Economic forecasting, Inflation (Economics)

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Price Adjustments with Stochastic Inflation

Article Abstract:

A model is developed to analyze the price-adjustment policy of a monopolistic firm under uncertain inflation. A certainty equivalent inflation rate is established. If this rate is negative, the firm benefits from an increase in expected inflation.

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