Thesis (Ph. D.)--Ohio State University, 1986. / Includes vita. Includes bibliographical references (leaves 108-117). Available online via OhioLINK's ETD Center.

Thesis (Ph. D.)--Ohio State University, 2007. / Title from first page of PDF file. Includes bibliographical references (p. 92-94).

Thesis (Ph. D.)--Ohio State University, 2007. / Title from first page of PDF file. Includes bibliographical references (p. 97-102).

Diss.--Philosophische Fakultät--Bonn--Rheinische Friedrich-Wilhelms-Universität, Wintersemester 1999/2000. / Bibliogr. p. 540-588. Index.

The subject of this dissertation is nominal GDP (NGDP) targeting. In the wake of the Great Recession, some economists have proposed using some form of NGDP target to replace current monetary policy. We evaluate the desirability of NGDP targets based upon their ability to deliver unique and \learnable" equilibria and their welfare gains in the presence of nancial frictions. In the second chapter, we assess the determinacy and E-stability conditions for simple interest rate rules which respond to NGDP's deviation from target in a simple three-equation New Keynesian model. The rules under consideration target either NGDP level or growth, and can either be contemporaneous, one period ahead, or two periods ahead. We also allow for dierent types of information sets for the agents. In the third chapter, we compare welfare loss in consumption equivalent terms for NGDP targets with more conventional monetary policy in a New Keynesian model which features nancial frictions. Finally, in the fourth chapter we continue our analysis from chapter one but now allow for strictly positive trend inflation. We present findings for the relationship between trend inflation and the determinacy and E-stability of the equilibrium when using interest rate rules that target NGPD.

O objetivo desta dissertação, primeiramente, é analisar empiricamente se a adoção do regime de metas de inflação (RMI) tem se mostrado eficaz ao longo dos anos no controle e manutenção dos índices de preços. Posteriormente é analisado o grau de impacto da condução da política monetária, imposta pelo RMI, sobre a taxa de desemprego e crescimento real do produto. Para alcançar estes objetivos, é feita uma análise comparativa dos períodos que compreendem o antes e o depois da adoção (até o ano de 2014) deste regime monetário, em especial o caso brasileiro. Outros objetivos incluem, com o intuito de melhor compreender a operacionalização do RMI, discutir as principais teorias de inflação e de regimes monetários, enfatizando o RMI por ser objeto central deste estudo. Desta forma, são discutidos os fundamentos teóricos, seus formatos estruturais, bem como as vantagens e desvantagens apontadas pelos críticos deste regime. Por fim, é apresentada a conclusão acerca da eficácia, ou não, deste regime na manutenção de baixos índices de inflação, e se o mesmo sacrificou em algum grau os níveis de emprego e produto, em especial no Brasil. / The first aim of this dissertation is to examine empirically whether the adoption of inflation targeting regime (IT) has proven effective over the years for the control and maintenance of low and stable inflation rates. Next, it is analyzed the impact of monetary policy based on the IT on the unemployment rate and real GDP growth. To achieve these goals, a comparative analysis is carried out, following the “before and after” methodology (until the year 2014), focusing especially on the Brazilian case. Other objectives include achieving a better understanding about the operation of the IT, discussing the main theories of inflation and monetary regimes, emphasizing the IT. Thus, the theoretical foundations of the IT are presented, its many structural formats, as well as the advantages and disadvantages cited by critics of this regime. Finally, the work presents the conclusion about the effectiveness, or lack thereof, of this regime in maintaining low inflation rates, and if it has sacrificed employment levels and product, especially in Brazil.

This dissertation is a collection of three chapters on inflation dynamics and money demands. Chapter 1 tests the forward-looking New Keynesian Phillips curve using a novel panel data set for the 50 U.S. states from year 1977 to 2005. Consistent with Gali and Gertler (1999), our results support a linkage between inflation and real unit labor cost, and reject a linkage between inflation and output gap. We also address several important econometrics issues in the empricial studies. Our tests on model identification and instruments validity reveal that compared with the model with real unit labor cost, the GMM estimators in the model with output gap are more sensitive to the choice of instruments. Also, we find that the unit labor cost has stronger persistence than the output gap, and that these two variables have almost opposite dynamic cross correlations with inflation. We conclude that the observed high autocorrelation properties of U.S. inflation-as measured by the sum of AR coefficients-is well described by the forward-looking New Keynesian Phillips curve. In the second chapter, we extend the pure forward-looking New Keynesian Phillips curve to a hybrid model. We adopt a dynamic panel data model by adding a lagged inflation variable to the explanatory variables. We find relative larger weights of future inflation than the lagged inflation. This finding confirms the forward looking behavior in theory and it is also consistent with our results from the pure forward-looking model estimation. Furthermore, we obtain more evidence of dominant forward-looking behavior by using the principal components based instruments. Our results show that principal components based methods produce more precise estimates with a substantial decrease in all three estimated standard errors. We obtain more evidence of dominant forward-looking behavior across all regressions. By comparing two groups of the Kleibergen-Paap Wald F rk statistic (KP statistic), we find that using principal components is a good option to overcome the weak identifications. This finding is consistent with Bai and Ng (2010) and Kapetanios and Marcellino (2010). However, contrast with our earlier findings, in the hybrid model, the identification of the parameter of the real marginal cost becomes a problem. The third chapter investigates the long-run money demand using a panel data set for the 50 U.S. states from year 1977 to 2005. Regional heterogeneity as well as the cointegration and cross-section correlation properties of panel data are considered in great detail. Contrary to previous studies in the field, we adopt panel data techniques with nonstationary and cointegrated variables which controls for dynamics, non-stationarity, parameter heterogeneity and unobserved time-varying heterogeneity. The empirical results reveal an income elasticity close to 0.7 and an interest semi-elasticity around -0.02 and these two parameter values match closely with the empirical estimates by Ball (2001). Furthermore, it is found that the magnitude of the estimates of error correction term is much less than unity (around 0.05), which suggests that the adjustment time of U.S. money demand to return to its long-run equilibrium may be rather long. Compared to a standard homogeneous panel model of money demand function, our results obtained from heterogeneous panel model estimation indicate that the heterogeneity across states is important. It shows that the observed instability of money demand functions in aggregate U.S. studies could be explained by inappropriate aggregation across heterogeneous states. After accounting for regional heterogeneity, the estimates of income elasticity for the U.S. money demand function are clearly less than one.

Is inflation targeting an appropriate framework for monetary policy? Experience from the inflation-targeting countries countries are optimistic about inflation targeting as a monetary-policy framework. South Africa is also following this trend. The international literature review of the topic offers lessons to be learnt from the common experience of the countries considered. It shows that inflation targeting is not a universal remedy to modern economic ills -- there is an emerging danger of assigning monetary policy a larger role than that which it can perform; a danger of expecting monetary policy to accomplish tasks that it cannot achieve; and a danger of preventing monetary policy from making the contribution that it is capable of doing. Therefore, inflation targeting cannot address all the macroeconomic problems that face many countries, except for inflation. Nonetheless, it plays a crucial role in improving macroeconomic performance. / Economics / M.A. (Economics)

O objetivo desta dissertação, primeiramente, é analisar empiricamente se a adoção do regime de metas de inflação (RMI) tem se mostrado eficaz ao longo dos anos no controle e manutenção dos índices de preços. Posteriormente é analisado o grau de impacto da condução da política monetária, imposta pelo RMI, sobre a taxa de desemprego e crescimento real do produto. Para alcançar estes objetivos, é feita uma análise comparativa dos períodos que compreendem o antes e o depois da adoção (até o ano de 2014) deste regime monetário, em especial o caso brasileiro. Outros objetivos incluem, com o intuito de melhor compreender a operacionalização do RMI, discutir as principais teorias de inflação e de regimes monetários, enfatizando o RMI por ser objeto central deste estudo. Desta forma, são discutidos os fundamentos teóricos, seus formatos estruturais, bem como as vantagens e desvantagens apontadas pelos críticos deste regime. Por fim, é apresentada a conclusão acerca da eficácia, ou não, deste regime na manutenção de baixos índices de inflação, e se o mesmo sacrificou em algum grau os níveis de emprego e produto, em especial no Brasil. / The first aim of this dissertation is to examine empirically whether the adoption of inflation targeting regime (IT) has proven effective over the years for the control and maintenance of low and stable inflation rates. Next, it is analyzed the impact of monetary policy based on the IT on the unemployment rate and real GDP growth. To achieve these goals, a comparative analysis is carried out, following the “before and after” methodology (until the year 2014), focusing especially on the Brazilian case. Other objectives include achieving a better understanding about the operation of the IT, discussing the main theories of inflation and monetary regimes, emphasizing the IT. Thus, the theoretical foundations of the IT are presented, its many structural formats, as well as the advantages and disadvantages cited by critics of this regime. Finally, the work presents the conclusion about the effectiveness, or lack thereof, of this regime in maintaining low inflation rates, and if it has sacrificed employment levels and product, especially in Brazil.

O objetivo desta dissertação, primeiramente, é analisar empiricamente se a adoção do regime de metas de inflação (RMI) tem se mostrado eficaz ao longo dos anos no controle e manutenção dos índices de preços. Posteriormente é analisado o grau de impacto da condução da política monetária, imposta pelo RMI, sobre a taxa de desemprego e crescimento real do produto. Para alcançar estes objetivos, é feita uma análise comparativa dos períodos que compreendem o antes e o depois da adoção (até o ano de 2014) deste regime monetário, em especial o caso brasileiro. Outros objetivos incluem, com o intuito de melhor compreender a operacionalização do RMI, discutir as principais teorias de inflação e de regimes monetários, enfatizando o RMI por ser objeto central deste estudo. Desta forma, são discutidos os fundamentos teóricos, seus formatos estruturais, bem como as vantagens e desvantagens apontadas pelos críticos deste regime. Por fim, é apresentada a conclusão acerca da eficácia, ou não, deste regime na manutenção de baixos índices de inflação, e se o mesmo sacrificou em algum grau os níveis de emprego e produto, em especial no Brasil. / The first aim of this dissertation is to examine empirically whether the adoption of inflation targeting regime (IT) has proven effective over the years for the control and maintenance of low and stable inflation rates. Next, it is analyzed the impact of monetary policy based on the IT on the unemployment rate and real GDP growth. To achieve these goals, a comparative analysis is carried out, following the “before and after” methodology (until the year 2014), focusing especially on the Brazilian case. Other objectives include achieving a better understanding about the operation of the IT, discussing the main theories of inflation and monetary regimes, emphasizing the IT. Thus, the theoretical foundations of the IT are presented, its many structural formats, as well as the advantages and disadvantages cited by critics of this regime. Finally, the work presents the conclusion about the effectiveness, or lack thereof, of this regime in maintaining low inflation rates, and if it has sacrificed employment levels and product, especially in Brazil.