Nominal Income and the Inflation-Growth Divide

Author/Editor:

Sheetal K. Chand

Publication Date:

November 1, 1997

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper deals with aggregate demand fluctuations and their price and output effects. Starting with a nominal income solution, a rule for determining the inflation and output growth effects is presented. Assigning alternative values to the key parameters of the suggested rule generates different closure rules, such as the classical and the Keynesian and their modern counterparts. An application to major industrial country data indicates that the suggested rule is robust. Both inflation and output growth are affected by nominal shocks, but response patterns vary among the countries.

Series:

Working Paper No. 1997/147

Subject:

Inflation Labor National accounts Personal income Potential output Prices Production Production growth Wages

English

Publication Date:

November 1, 1997

ISBN/ISSN:

9781451856699/1018-5941

Stock No:

WPIEA1471997

Pages:

32

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