Umeå Economic Studies, Department of Economics, Umeå University
No 475:
The Efficacy and Cost of Regime Shifts in Inflation Policies: Evidence from New Zealand and Sweden
Sven-Olov Daunfeldt ()
and Xavier de Luna
Abstract: In this paper a comparative study of the regime shift in
inflation policies in New Zealand and Sweden is performed. We use a
non-parametric regression method to decompose the inflation time series
into three components of variation: a long-term trend, a medium-term
(cyclical and transient variations) trend and a short-term shocks
component. This allows us to study the transition process from the high
inflation characterizing the end of the seventies and the eighties to the
low inflation observed during the nineties. We find that in New Zealand,
although it is initially delayed, the decrease in inflation happens at a
faster pace than in Sweden. This may indicate that reforms were more
efficient in New Zealand. We also show a clear link between the rising
unemployment and the transition from high to low inflation. Furthermore,
while in New Zealand a downward adjustment of the unemployment rate happens
directly after the transition period, in Sweden there seems to be
persistence in high unemployment.
Keywords: Inflation regimes; unemployement; non-parametric regression; components of variation; (follow links to similar papers)
JEL-Codes: C14; E24; E31; (follow links to similar papers)
19 pages, October 9, 1998
Download Statistics
- This paper is forthcoming as:
-
Daunfeldt, Sven-Olov and Xavier de Luna, 'The Efficacy and Cost of Regime Shifts in Inflation Policies: Evidence from New Zealand and Sweden', Applied Economics.
Questions (including download problems) about the papers in this series should be directed to Kjell-Göran Holmberg ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
