Inflation targeting, credibility and coordination aspects

There are plenty of economic studies pointing out some requirements, like the inexistence of fiscal dominance, for inflation targeting framework be implemented in successful (credible) way. Essays on how public targets could be used in the absence of such requirements are unusual. In this papel' we appraise how central banks could use inflation targeting before soundness economic fundamentaIs have been achieved. First, based on concise framework, where confidence crises and imperfect information are neglected, we conclude that less ambitious (greater) target for inflation increases the credibility in the precommitment. Optimal target is higher than the one obtained using the Cukierman-Liviatan [7] model, where increasing credibility effect is not considered. Second, extending the model to make confidence crises possible, multiple equilibria solutions becomes possible too. In this case, to set greater targets for inflation may stimulate confidence crises and reduce the policymaker credibility. On the other hand, multiple (bad) equilibria may be avoided. The optimal target depends on the likelihood of each equilibrium be selected. Finally, when perturbing common knowledge uniqueness is restored even considering confidence crises, as in Morris-Shin[ 14]. The first result, i.e. less ambitious target for inflation increases credibility in precommitment, is also recovered. Adding a precise public signal, cOOl'dinated self-fulfilling actions and equilibrium multiplicity may still exist for some lack of common knowledge (as in Angeleto and Weming[l]). In this case, to set greater targets for inflation may stimulate confidence crisis again, reducing the policymaker credibility. From another aspect, multiple (bad) equilibria may be avoided. Optimal policy prescriptions depend on the likelihood of each equilibrium be selected. Results also indicate that more precise public information may open the door for bad equilibrium, contrary to the conventional wisdom that more central oank transparency is always good when considering inflation targeting framework.

Time-dependent or state-dependent pricing? Evidence from firms’ response to inflation shocks

This paper proposes a test for distinguishing between time-dependent and state-dependent pricing based on whether the timing of pricing changes is affected by realized or expeted inflation. Using Brazilian data and exploring a large discrepancy between realized and expected inflation in 2002-3, we obtain a strong relation between expected inflation and duration of price spells, but little effect of inflation shocks on the frequency of price adjustment. The results thus support models with timedependent pricing, where the timing for following changes is optimally chosen whenever firms adjust prices

Apresentação 10: “Inflation Targeting”, “Currency Regimes with Defaultable Debts” e Sistema Tributário na Presença de Informalidade e Evasão Fiscal…A disseminação internacional das pesquisas aplicadas relacionadas a agenda brasileira

Coordenadora: Goret P. Paulo

Welfare cost of inflation considering adoption decisions and interest-bearing deposits

Attanasio et al. (JPE, 2002) have used microeconomic data on households to provide new estimates of the welfare costs of infiation using Bailey's unidimensional welfare measure as a basis for their calculations. Such a measure does not properly take into consideration lhe fact that the majority of households in their sample (58.7 percent) holds not only bank deposits and currency, but also a second type of interest-bearing assct. This work devises alternative formulas which account for the existence of bank deposits and a sccond interest-bearing asset in the economy, as well as for adoption decisions regarding alternative financiai technologies.

Cosmic microwave background and large-scale structure constraints on a simple quintessential inflation model

We derive constraints on a simple quintessential inflation model, based on a spontaneously broken Phi(4) theory, imposed by the Wilkinson Microwave Anisotropy Probe three-year data (WMAP3) and by galaxy clustering results from the Sloan Digital Sky Survey (SDSS). We find that the scale of symmetry breaking must be larger than about 3 Planck masses in order for inflation to generate acceptable values of the scalar spectral index and of the tensor-to-scalar ratio. We also show that the resulting quintessence equation of state can evolve rapidly at recent times and hence can potentially be distinguished from a simple cosmological constant in this parameter regime.

Towards brane-antibrane inflation in type IIA: the holographic MQCD mode

Conselho Nacional de Desenvolvimento Científico e Tecnológico (CNPq)

A simple model for quintessential inflation

We propose a simple toy model for quintessential inflation where a complex scalar field described by a Lagrangian with a U(1)(PQ) symmetry spontaneously broken at a high energy scale and explicitly broken by instanton effects at a much lower energy can account for both the early inflationary phase and the recent accelerated expansion of the Universe. The real part of the complex field plays the role of the in flaton whereas the imaginary part, the 'axion', is the quintessence field.

Inflation and relative prices: the Brazilian experience, 1970/79.

Based on behaviour of output growth and industrial sector prices, it tries to define the several stages comprising the cyclic trends of the Brazilian economy. Analyzes the behaviour of inflation rates and of relative prices, and shows that there is a positive association between the measures of inflation rates and of their variables as well as between both these measures and dispersion of relative price changes. Demonstrates the assymetric behaviour of relative price changes and differentiated behaviour in relative prices of farm produce and industrial products. -from Authors

Preheating in quintessential inflation

We perform a numerical study of the preheating mechanism of particle production in models of quintessential inflation and compare it with the usual gravitational production mechanism. We find that even for a very small coupling between the inflaton field and a massless scalar field, g ≳ 10 -6, preheating dominates over gravitational particle production. Reheating temperatures in the range 10 4 ≲ T rh ≲ 10 15 GeV can be easily obtained. © 2003 Published by Elsevier B.V.

Quintessential inflation and non-oscillatory reheating model

A numerical study of the non-oscillatory reheating mechanism in a quintessential inflation context shows that high reheating temperature can be achieved compared with the usual reheating mechanism in which particles are produced gravitationally. We find that even for a very small coupling between the inflaton field and a massless scalar field, the non-oscillatory reheating production of particles dominates over the gravitational production mechanism. © 2004 Published by Elsevier B.V.

World inflation and foreign debt: the case of the improper deflator

Includes bibliography

Inflation and the variability of relative prices in the Caribbean: evidence from panel threshold models

Includes bibliography

Inflation and growth: a summary of experience in Latin America

Includes bibliography

Runaway inflation: experiences and options

Includes bibliography