Measuring core inflation in Bangladesh : an unobserved components approach

This paper attempts to construct a core inflation measure for Bangladesh using an Unobserved Components modelling approach. One advantage of the Unobserved Components approach is that this method satisfies some essential statistical criteria for a core inflation measure, which are not guaranteed to be met in other traditional exclusionbased methods. The estimated core inflation series performs well in tracking headline inflation and picking the major turning points in actual inflation. It is also found that there is a negative covariance between the shocks to the core inflation and cyclical inflation, indicating that there may be positive correlation between demand and supply shocks in Bangladesh.

Inflation dynamics and New Keynesian Phillips Curve in Australia

The New Keynesian Phillips Curve (NKPC) is a standard model in the analysis of inflation dynamics. For the Australian economy, this study establishes the empirical evidence that the NKPC can explain the process of inflation dynamics and the price-setting mechanism. The trade shocks, such as the real exchange rate and the terms of trade, play an important role in inflation dynamics.

Inflation and quality dispersion

One questionable aspect of price posting with directed search is the strong commitment by sellers to commit to the advertised terms of trade. In this paper I explore the welfare implications of assuming that sellers cannot commit and vary the quality of their output ex post according to realized demand. I show that such lack of commitment translates into lower participation by buyers, lower average quality, and a consumption-equivalent loss of 0.3% of annual GDP.

Three essays on stock returns and inflation - Australian evidence

Results of this thesis suggest that a significant negative relation between stock returns and inflation identified in Australia during ‘inflation targeting’ is mainly due to an incidence of ‘flight to safety’. Furthermore, the impact of inflation news on stock returns is industry-sector dependent. Specifically, in Australia rising inflation seems to be good news for Financials, but bad news for Materials.