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Trend Infl Trend Inflation In Modera Tion In Moderate And L Te And Low Infl Ow Inflation Periods: The Implica Periods: The Implication Of Th Tion Of Thai Mone Ai Monetary Policy

Author

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  • Nipit Wongpunya

    (Chulalongkorn University, Thailand)

Abstract

This paper examines the effects of trend inflation on managing of monetary policy during moderate and low inflation environments in Thailand. It extends the New Keynesian model by introducing a positive trend inflation. It finds that the response of inflation and output are lower during the moderate inflation period. A high level of trend inflation enlarges the welfare loss. When the target level for inflation is higher, lower weight on output fluctuation is the optimal policy. To adjust the inflation targeting rate, the central bank should consider the response of inflation and output gap to preserve the determinacy.

Suggested Citation

  • Nipit Wongpunya, 2023. "Trend Infl Trend Inflation In Modera Tion In Moderate And L Te And Low Infl Ow Inflation Periods: The Implica Periods: The Implication Of Th Tion Of Thai Mone Ai Monetary Policy," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 26(3), pages 445-468, September.
    • Handle: RePEc:idn:journl:v:26:y:2023:i:3c:p:445-468
    DOI: https://doi.org/10.59091/2460-9196.1797
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    More about this item

    Keywords

    Trend inflation; Monetary policy; Price dispersion; Welfare; Determinacy;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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