IDEAS home Printed from https://ideas.repec.org/a/fip/fedrer/y1988isepp10-18nv.74no.5.html
   My bibliography  Save this article

The forecast performance of alternative models of inflation

Author

Listed:
  • Yash P. Mehra

Abstract

It is inappropriate to ignore the behavior of money in explaining the generation and evolution of aggregate inflation over time. It is shown that over the period 1977 to 1987 an inflation model based on M2 demand describes more accurately the actual behavior of inflation than an expectations-augmented version of the Phillips curve.

Suggested Citation

  • Yash P. Mehra, 1988. "The forecast performance of alternative models of inflation," Economic Review, Federal Reserve Bank of Richmond, vol. 74(Sep), pages 10-18.
    • Handle: RePEc:fip:fedrer:y:1988:i:sep:p:10-18:n:v.74no.5
    as

    Download full text from publisher

    File URL: https://fraser.stlouisfed.org/files/docs/publications/frbrichreview/rev_frbrich198809.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fama, Eugene F., 1983. "Financial intermediation and price level control," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 7-28.
    2. Leonall C. Andersen & Keith M. Carlson, 1986. "A monetarist model for economic stabilization," Review, Federal Reserve Bank of St. Louis, issue Oct, pages 45-66.
    3. Rasche, Robert H., 1987. "M1 -- Velocity and money-demand functions: Do stable relationships exist?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 27(1), pages 9-88, January.
    4. Stockton, David J & Glassman, James E, 1987. "An Evaluation of the Forecast Performance of Alternative Models of Inflation," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 108-117, February.
    5. David J. Stockton & Charles S. Struckmeyer, 1987. "Tests of the specification and predictive accuracy of nonnested models of inflation," Working Paper Series / Economic Activity Section 71, Board of Governors of the Federal Reserve System (U.S.).
    6. Reichenstein, William & Elliott, J. Walter, 1987. "A comparison of models of long-term inflationary expectations," Journal of Monetary Economics, Elsevier, vol. 19(3), pages 405-425, May.
    7. Hetzel, Robert L, 1984. "Estimating Money Demand Functions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(2), pages 185-193, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. John A. Tatom, 1990. "The P-star approach to the link between money and prices," Working Papers 1990-008, Federal Reserve Bank of St. Louis.
    2. John A. Tatom, 1990. "The link between monetary aggregates and prices," Working Papers 1990-002, Federal Reserve Bank of St. Louis.
    3. Tobias F. Rötheli, 1990. "Money Supply and Money Demand Determinants of Swiss Inflation," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 126(I), pages 1-15, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. William Poole & Robert H. Rasche & David C. Wheelock, 2013. "The Great Inflation: Did The Shadow Know Better?," NBER Chapters, in: The Great Inflation: The Rebirth of Modern Central Banking, pages 61-107, National Bureau of Economic Research, Inc.
    2. Chan Il Park, 1998. "Transactions Demand for Money and the Inverse Relation Between Inflation and Output: the Case of Korean Economy," International Economic Journal, Taylor & Francis Journals, vol. 12(1), pages 39-51.
    3. Mukherjee, Deepraj & Kemme, David, 2008. "Evaluating inflation forecast models for Poland: Openness matters, money does not (but its cost does)," MPRA Paper 14952, University Library of Munich, Germany.
    4. Yash P. Mehra, 1989. "Cointegration and a test of the quantity theory of money," Working Paper 89-02, Federal Reserve Bank of Richmond.
    5. Ryba, André, 1976. "La politique monétaire aux États-Unis, par l’O.C.D.E. Série « Études monétaires ». O.C.D.E., Paris, 1974," L'Actualité Economique, Société Canadienne de Science Economique, vol. 52(1), pages 137-142, janvier.
    6. Fofana, Abdulai & Toma, Luiza & Moran, Dominic & Gunn, George J. & Stott, Alistair W., 2009. "Measuring the economic benefits and costs of Bluetongue virus outbreak and control strategies in Scotland," 83rd Annual Conference, March 30 - April 1, 2009, Dublin, Ireland 51052, Agricultural Economics Society.
    7. Boucekkine, R. & Laksaci, M. & Touati-Tliba, M., 2021. "Long-run stability of money demand and monetary policy: The case of Algeria," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).
    8. Slim Mahfoudh & Mohamed Ben Amar, 2015. "The Impact of Economic Policies on Economic Growth in a Group of Arabic Countries: Empirical Verification using Non-Stationary Panel Model," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 131-137, May.
    9. Poole, William, 1988. "Monetary Policy Lessons of Recent Inflation and Disinflation," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 73-100, Summer.
    10. Ang, Andrew & Bekaert, Geert & Wei, Min, 2007. "Do macro variables, asset markets, or surveys forecast inflation better?," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1163-1212, May.
    11. Johannes Fedderke & Yang Liu, 2018. "Inflation in South Africa: An Assessment of Alternative Inflation Models," South African Journal of Economics, Economic Society of South Africa, vol. 86(2), pages 197-230, June.
    12. Yash P. Mehra, 2000. "Wage-price dynamics : are they consistent with cost push?," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 27-43.
    13. John Galbraith & Greg Tkacz, 2007. "How Far Can Forecasting Models Forecast? Forecast Content Horizons for Some Important Macroeconomic Variables," Staff Working Papers 07-1, Bank of Canada.
    14. Franco Modigliani, 1977. "The monetarist controversy; or, should we forsake stabilization policies?," Economic Review, Federal Reserve Bank of San Francisco, issue Spr suppl, pages 27-46.
    15. Mcgibany, James M. & Nourzad, Farrokh, 1995. "Exchange rate volatility and the demand for money in the U.S," International Review of Economics & Finance, Elsevier, vol. 4(4), pages 411-425.
    16. William T. Gavin & William G. Dewald, 1989. "The Effect of Disinflationary Policies on Monetary Velocity," Cato Journal, Cato Journal, Cato Institute, vol. 9(1), pages 149-164, Spring/Su.
    17. William Dewald & Maurice Marchon, 1979. "A common specification of price, output, and unemployment rate responses to demand pressure and import prices in six industrial countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 115(1), pages 1-19, March.
    18. Bardsen, Gunnar & Eitrheim, Oyvind & Jansen, Eilev S. & Nymoen, Ragnar, 2005. "The Econometrics of Macroeconomic Modelling," OUP Catalogue, Oxford University Press, number 9780199246502.
    19. Rik Hafer & David C. Wheelock, 2001. "The rise and fall of a policy rule: monetarism at the St. Louis Fed, 1968-1986," Review, Federal Reserve Bank of St. Louis, vol. 83(Jan), pages 1-24.
    20. Jan Marc Berk, 2002. "Central banking and financial innovation. A survey of the modern literature," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 55(222), pages 263-297.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedrer:y:1988:i:sep:p:10-18:n:v.74no.5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Pascasio (email available below). General contact details of provider: https://edirc.repec.org/data/frbrius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.