Fiscal policy and inflation volatility

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 317

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Fiscal Policy
• Subject: Fiscal Policy ; inflation volatility

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rother, Philipp
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/152751
• Last update: 10.03.2025, 11:44 AM CET