CEU Electronic Theses and Dissertations, 2009
| Author | Tutberidze, Davit |
|---|---|
| Title | Welfare Cost of Inflation in the Economy with Inflation Targeting: The Case of New Zealand |
| Summary | The present research estimates the welfare cost of inflation in New Zealand. The size of this cost in the economy with inflation targeting regime deserves much attention as to evaluate the policy towards reduction of inflation-induced welfare losses. I use GMM estimation technique to estimate the parameters characterizing preferences and technology. The calculated cost of the rise of quarterly inflation from 0% to 1% is equivalent to 0.00804% of GNP. This is substantially smaller than those reported in other studies with partial equilibrium approach. The research provides two possible justifications for the minuteness of the estimates: 1) Reserve Bank of New Zealand’s credibility lent by the citizens which makes inflation expectations anchored; 2) The actual independence of Reserve Bank from the influence of government bodies thus avoiding the inflationary finance. |
| Supervisor | Campolmi Alessia |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2009/tutberidze_davit.pdf |
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