Exploring the nexus between inflation and globalization under inflation targeting through the lens of New Zealand's experience

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1709

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Forecasting Models; Simulation Methods ; Open Economy Macroeconomics ; Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation: Models and Applications ; Economic Impacts of Globalization: Macroeconomic Impacts
• Subject: Inflation Dynamics ; Open-Economy Phillips Curve ; Inflation Targeting ; Inflation Forecasting

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kabukçuoğlu, Ayşe ; Martínez-García, Enrique ; Soytaş, Mehmet Ali
• Event: Veröffentlichung
• (who): Koç University-TÜSİAD Economic Research Forum (ERF)
• (where): Istanbul
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/202999
• Last update: 10.03.2025, 11:45 AM CET