Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202999 
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 1709
Publisher: 
Koç University-TÜSİAD Economic Research Forum (ERF), Istanbul
Abstract: 
We investigate empirically the inflation dynamics in New Zealand, a small open economy and a pioneer in inflation targeting, under various open-economy Phillips curve specifications. Our forecasting exercise suggests that open-economy Phillips curves under standard measures of global slack do not help forecast domestic inflation, possibly indicating measurement problems with global slack itself. In turn, under a stable inflation target we still find that (i) global inflation or (ii) global inflation or oil prices have information content for headline CPI and core CPI inflation over the 1997:Q3-2015:Q1 period and appear to be reliable proxies for global slack in forecasting inflation.
Subjects: 
Inflation Dynamics
Open-Economy Phillips Curve
Inflation Targeting
Inflation Forecasting
JEL: 
C21
C23
C53
F41
F47
F62
Document Type: 
Working Paper

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