Narrow Results

Primordial gravitational waves, after they enter the horizon and decay away, leave a residual displacement in test particles: a memory, in analogy with gravitational waves generated by astrophysical sources. The late-time distance between test particles is related to the one at early times by ${\xi }_{\mathrm{\text{late}}}^i=\frac{a_{\mathrm{\text{late}}}}{a_{\mathrm{\text{early}}}}({\delta }_j^i-\frac{1}{2}{\bar{h}}_j^i){\xi }_{\mathrm{\text{early}}}^j$. Therefore, the deformation of an initial spherical shell does not depend on the cosmological evolution, but only on the primordial value ${\bar{h}}_j^i$ of the gravitational wave. The memory is thus related to the adiabatic tensor mode that maps the unperturbed FLRW geometries at early and late times; this is analogous to the relation between memory in Minkowski spacetime and the BMS group. The primordial memory is also connected to the consistency relations of cosmological correlators, as the flat-space memory is related to the soft theorems for gravitational wave emission. We comment on the signature of the effect on the CMB B-modes and on the large-scale structure. There is also a primordial memory effect that is subleading in the spatial gradients of the wave: it is encoded in the rotation of free-falling gyroscopes.

To the memory of Valery A. Rubakov. Contribution to the special issue of the International Journal of Modern Physics A.

In this paper, we examine the pre-inflationary universe for the potential $V(\varphi )\propto {\varphi }^{1.9}$ in the framework of loop quantum cosmology. We choose such type of potential as the quadratic potential is almost disfavored by the Planck 2018 data. We primarily study the initial conditions of the inflaton field that are physically viable and produce the slow-roll inflation. We also obtain the number of $e$-folds in the slow-roll regime that are consistent with the observations. In addition, we present the phase space analysis and show that the slow-roll inflation is an attractor for a wide range of initial conditions.

This paper investigates the factors that interact with interest rates. The results show that interest rates positively correlate with deviations in inflation, the logarithm of the real GDP (gross domestic product) ratio, the logarithm of the money supply ratio, deviations in unemployment rates, money velocity, deficit, and the dollar index. The interest rates negatively correlate with debt, the Dow Jones Industrial Average (DJIA), debt to GDP ratio, and real GDP growth rate. Regression analysis shows with statistical significance an increase in interest rates with deviations in inflation, money velocity, the dollar index, and a decrease with the DJIA. The analysis is refined by removing insignificant variables and addressing a multicollinearity problem. The results could provide governments and central banks with focal points for developing interest rate policies.

This paper shows that increasing the rate of monetary growth increases the capital-labor ratio in the long run when the initial inflation rate is low but decreases the capital-labor ratio when the inflation rate is high. This paper provides a theoretical justification for the empirical result by Bullard and Keating (1996) that inflation has positive real effects for low-inflation countries in the long run but negative effects for higher-inflation countries.

The Fisher hypothesis has been a much debated topic. Over the years the hypothesis debated and the techniques used have changed. While the majority of early studies on the Fisher effect concentrated primarily on confirming the long and distributed lag in expectations formation, subsequent work saw the integration of the Fisher hypothesis with the theories of rational expectations and efficient markets. With the incorporation of these theories in the Fisher hypothesis, the methodological advances involved examining the time series properties of the variables in question. This survey reviews previous work from this perspective. In addition, the studies pertaining to developing economies and possible explanations for the failure of the Fisher effect are also reviewed.

This paper examines the key characteristics of Singapore's exchange rate-centered monetary policy; in particular, its managed float regime which incorporates key features of the basket, band and crawl system popularized by Williamson (1998, 1999). We assess how the flexibility accorded by this framework has been advantageous in facilitating adjustment to various shocks to the economy. A characterization of the countercyclical nature of Singapore's exchange rate policy is also offered, with reference to recent work on the monetary policy reaction function and estimates of Singapore's behavioral equilibrium exchange rate. We also review previous econometric analysis which provides evidence that Singapore's managed float system may have helped to mitigate the spillover effects of such increased volatility into the real economy. The track record of Singapore's managed float regime over the past two decades suggests that intermediate regimes are a viable alternative to the so-called "corner solutions", especially when supported by consistent macroeconomic and microeconomic policies as well as strong institutions.

This paper seeks to establish whether or not monetary aggregates M₁ and M₂ have useful information for forecasting inflation, other than that provided by inflation itself. The study is approached in two ways. First, it conducts forecasting experiments, using mean absolute percentage errors (MAPEs). It then evaluates whether each monetary variable improves the forecasts of a simple autoregressive (AR) (1) model of inflation or not. The study reveals that the MAPEs for all the variables are less than that of the benchmark AR (1) model. This implies that all the variables examined serve as important information variables for price movements.

Also, from the inflation equation, the paper reveals that monetary aggregate (M₂), Treasury bill rate, deposit rate and exchange rates are significant in the equation, therefore concluding that these variables provide useful information in predicting inflation in Nigeria.

This paper determines the conditions required for fiscal contractions to be expansionary when government spending is financed by money seigniorage. It shows that the expansionary effects of permanent fiscal contractions are dependent on the initial rates of inflation prevailing in the economy and that the set of initial inflation rates under which fiscal contractions are expansionary is affected by the degree of substitutability between public and private consumption. Starting from the benchmark case where public and private consumption are independent, introducing complementarity between public and private consumption gives rise to a weaker set of conditions for fiscal contractions to be expansionary. This implies that economies that print money to finance government spending complementary with private consumption are more likely to experience expansions if they pursue fiscal contractions.

The Fisher Effect postulated that real interest rate is constant, and that nominal interest rate and expected inflation move one-for-one together. This paper employs Johansen's method to investigate for the existence of a long-run Fisher effect in the Singapore economy over the period 1976 to 2006, and finds evidence of a positive relationship between nominal interest rate and inflation rate while rejecting the notion of a full Fisher Effect. The dynamic relationship between nominal interest rate and inflation rate is also examined from the error-correction models derived, and the analysis is extended to investigate the impulse response functions of inflation and nominal interest rates where we discover the presence of the Price Puzzle in the Singapore market.

This paper studies the role of the real money gap — the deviation of real money balance from its long-run equilibrium level — for predicting inflation in India. Using quarterly data on manufacturing inflation from 1982 to 2007, we find that the real money gap is a significant predictor of inflation in India. Our results show that this variable is a better predictor of future inflation at quarterly horizon than the deviation of broad money growth from its target for the whole sample period. We also document a break in the overall predictability of inflation in the last quarter of 1995. We find that, except for the real money gap, the forecasting power of other predictors under study has declined considerably after 1995.

This paper investigates the links between inflation, its uncertainty and economic growth in five ASEAN countries over the period 1980: Q1–2011: Q3. We rely on the Exponential GARCH (EGARCH) model to explore the causal relationship among the three variables. The major findings are: (i) inflation uncertainty increases more in response to positive inflation surprises than to negative surprises in all countries; (ii) inflationary shocks affect positively inflation uncertainty as predicted by the Friedman–Ball hypothesis; (iii) there is no evidence to suggest that inflation uncertainty causes inflation and; (iv) there is evidence that inflation affects growth negatively, both directly and indirectly (via the inflation uncertainty channel). The indirect effect is clearly stronger as it applies in all countries in the sample.

This paper investigates the long-run and short-run impacts of government spending on inflation in three Asian emerging economies of India, China and Indonesia by applying the cointegration and Vector Error Correction Model to time series data from 1970 to 2010. The results confirm a cointegrating causal link between government spending and inflation in the long run in these countries, regardless of their institutional governance differences. In the short run, government spending (as a percentage of GDP) appears to have a negative impact on inflation in China, while a positive impact in Indonesia and India. The implication is that governments of emerging economies should be prudent with their decisions on government spending.

The focus of this paper is to examine the effects and mechanism of government expenditures (GEs) in determining the long-term inflation differentials across countries. For this purpose, we formulate a theoretical model and the related regression system. The models allow us to understand and quantify the supply-side (SS) and demand-side (DS) effects of GEs in determining prosperity or stagnation across countries. This study provides cross-country evidences and related mechanisms supporting the hypothesis and conclusion that active short-term AD policies and over-estimated potential output, as argued in Orphanides (2003), were contributive to the Great Inflation.

Measuring markups in restaurant services is a difficult task. Although the sales price is observed, cost of the product served is unobserved. In this study, we employ an intuitive framework and focus specifically on markups on soft drinks. We analyze the determinants of markup on soft drinks in restaurants over 2006–2014. Results suggest that current demand conditions (net minimum wage, output gap), major cost items (food and energy prices, exchange rate) and economic uncertainty (exchange rate volatility) significantly affect markups. This strategy enables the detection of relevant factors which may not be possible to detect in other settings.

This paper explores the relationship between inflation and relative price variability (RPV) in Turkey for the period 2004–2017 to shed further light on the issue with relatively recent data. For this purpose, we use monthly price data for 12 main item groups and 414 specific items thereof. Analyses show that RPV for the period of interest exhibits large fluctuations, being particularly salient in the categories of communications and food. Regarding the underlying functional form, semi-parametric estimation results indicate a U-shaped relationship between inflation and RPV, where the latter reaches its minimum at an inflation level close to 8%.

This investigation tests the dynamic and quantile causality between inflation and inflation uncertainty of China with constructing a rolling-window based quantile causality test. The result shows unidirectional causality from inflation to inflation uncertainty, which is significantly asymmetric and time-varying. Inflation more likely causes inflation uncertainty in higher quantiles, indicating the linear model based on conditional mean may overestimate this impact in a lower quantile interval. Furthermore, the influence also exhibits a consistent time-varying property that cannot be explained simply by the conditional distribution. The causality shows more significance since 2007 when China cancelled the mandatory settlement system, which led to the increase of monetary policy independence. The time-varying nature indicates institutional changes may lead to regime switching of this causality. Our result supports the Friedman–Ball hypothesis [Friedman, M (1977). Nobel lecture: Inflation and unemployment. Journal of Political Economy, 85(3), 451–472; Ball, L (1992). Why does high inflation raise inflation uncertainty? Journal of Monetary Economic, 29(3), 371–388] to a certain extent and implies that the purpose of controlling inflation uncertainty of China can be achieved by controlling inflation if and only if it is relatively high on the premise of the independence of monetary policy.

Based on the demand-pull and cost-push theory, this study examines the relationship between foreign direct investment (FDI) and inflation nexus by using time series technique of Autoregressive Distributed Lags (ARDL). Asymmetry assumption was investigated by employing relatively advanced Nonlinear Autoregressive Distributed Lag (NARDL) method. Annual data from 1973 to 2017 has been collected from the World Bank database and DataStream. The results revealed that Bangladesh’s FDI inflow has a significant impact on the inflation rate, which augurs well for the economy. In addition, we also discover an asymmetric relationship in the long run and symmetric relationship in the short run. Several policy recommendations of these findings are provided.

A model that integrates the issues of production, quality, maintenance, inspection, inflation, and time value of money is proposed in this paper. It is assumed that the production system starts in the in-control state producing items of high or perfect quality. However, the process may deteriorate with time and shifts at a random point in time to an out-of-control state and begins to produce non-conforming items. The elapsed time for the process to shift to the out-of-control state is assumed to follow a general distribution. Imperfect preventive maintenance, restoration, and inspection errors are taken into account. Also, inflation, time value of money, and shortage are considered in the proposed model. Numerical examples are presented to illustrate important aspects of the integrated model.

Since the publication of the Goyal model in 1985, research on the modeling of inventory lot-size under trade credits has resulted in a body of literature. In this paper, we present a review of the advances in inventory literature under conditions of permissible delay in payments since 1985. We classify all related previous articles into five categories based on: (a) without deterioration, (b) with deterioration, (c) with allowable shortage, (d) linked to order quantity, and (e) with inflation. The motivations, extensions and weaknesses of various previous models have been discussed in brief to bring out pertinent information regarding model developments in the past two decades.

In Moon and Lee's model (2000), they developed a finite planning horizon economic order quantity (EOQ) model with time value of money and inflation. This paper extends Moon and Lee's model to examine a production system with a random life cycle. Two conditions are discussed: the first is when the product life cycle ends in the production stage and the second is when the product life cycle ends in the non-production stage. We develop an algorithm to derive the optimal period time and expected total cost. Numerical examples and sensitivity analyses are given to validate the results of the production model.