Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152751
Authors: 
Rother, Philipp
Year of Publication: 
2004
Series/Report no.: 
ECB Working Paper 317
Abstract: 
Among the harmful effects of inflation, the negative consequences of inflation volatility are of particular concern. These include higher risk premia, hedging costs and unforeseen redistribution of wealth. This paper presents panel estimations for a sample of OECD countries which suggest that activist fiscal policies may have an important impact on CPI inflation volatility. Major results are robust for unconditional and conditional inflation volatility, the latter derived from country-specific GARCH models, and across different data frequencies, time periods and econometric methodologies. From a policy perspective, these results point to the possibility of further destabilising effects of discretionary fiscal policies, in addition to their potential to destabilise output.
Subjects: 
Fiscal Policy
inflation volatility
JEL: 
E31
E62
Document Type: 
Working Paper

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