2010-ECON 202 L18 - ECON202 Viv Hall, SEF VUW L18 New...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON202 Viv Hall, SEF VUW L18 New Zealand’s Phillips Curves, and a small Dynamic Model 1. New Zealand’s major dis inflation , ongoing low and stable inflation, actual and “natural” unemployment rates (NRUs) 2. Asimple theoretical framework for evaluating the output and unemployment costs associated with dis inflation 3. Roles of expectations and/or wage and price rigidities/inflexibilities, in dis inflation adjustment processes Blanchard 5/e, chapter 9
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
ECON202 Viv Hall, SEF VUW Dis inflation : (1) We consider NZ’s major dis inflation , and ongoing low and stable inflation , in the context of its short-run and ‘long-run’ Phillips Curves , judgemental NRU’s , and key policy changes But first note that “ dis inflation ”isa fall in the rate of inflation . Contrast this term with de flation ”, a (sustained) fall in the aggregate price level , and therefore consistent with a negative inflation rate (e.g. see B. pp 28, 32, 178)
Background image of page 2
ECON202 Viv Hall, SEF VUW Dis inflation : (2) Movements over time for NZ’s CPI Inflation We can categorise movements, since the 1970s, in NZ’s CPI Inflation (measured by a “CPI Inflation minus Interest Rates and GST” series), into 5 basic time periods: - 1970 to 1980: inflation ac celeration; - Unsuccessful initial attempt to disinflate via price, wage & other controls , 1982 to 1984 - Early stage s of dis inflation via monetary policy, and the search for stable monetary indicators: Post – 1984 to late 1980s -Dis inflation under the RBNZ Act 1989 - Ongoing price stability under the RBNZ Act So , what are the Short-run and ‘Long-run’ Phillips Curves for New Zealand, i.e. short-run EAPC’s , and “ no long-run tradeoff/NAIRU positions ”, which lie behind this, over the period 1970 – 2010 ?
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
ECON202 Viv Hall, SEF VUW NZ CPI Inflation: RBNZ MPS September 2010, Figure 2.4 New Zealand CPI (Headline) Inflation (Annual percentage change) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 Mar-0 0 S ep - 00 Mar-01 e p- 01 Mar-02 Sep- 02 Mar- 3 Mar 04 Sep-04 05 06 Ma r- 07 -0 7 M ar- 8 p-0 Mar-09 Sep-0 9 Mar-10 Sep-1 11 1 12 Sep-12 13 Projection Historical Headline CPI Inflation Excluding policy changes* * i.e. excluding direct inflation impacts of GST increase, increased tobacco excise tax,
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 17

2010-ECON 202 L18 - ECON202 Viv Hall, SEF VUW L18 New...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online