The International Transmission of Inflation

by Darby, Michael R.; Lothian, James

• ISBN13: 9780226136424
• ISBN10: 0226136426
• Edition: Reprint
• Format: Paperback
• Copyright: 1985-02-01
• Publisher: Univ of Chicago Pr

Summary

Inflation became the dominant economic, social, and political problem of the industrialized West during the 1970s. This book is about how the inflation came to pass and what can be done about it. Certain to provoke controversy, it is a major source of new empirical information and theoretical conclusions concerning the causes of international inflation. The authors construct a consistent data base of information for eight countries and design a theoretically sound model to test and evaluate competing hypotheses incorporating the most recent theoretical developments. Additional chapters address an impressive variety of issues that complement and corroborate the core of the study. They answer such questions as these: Can countries conduct an independent monetary policy under fixed exchange rates? How closely tied are product prices across countries? How are disturbances transmitted across countries? The International Transmission of Inflation is an important contribution to international monetary economics in furnishing an invaluable empirical foundation for future investigation and discussion.

Author Biography

Michael R. Darby is professor of economics at the University of California at Los Angeles. James R. Lothian is a vice-president of Citibank, New York.

Table of Contents

Preface

Preliminaries

Introduction and Summary

The Postwar Institutional Evolution of the International Monetary System

The International Data Base: An Introductory Overview

The Timing of Monetary and Price Changes and the International Transmission of Inflation

The Mark III International Transmission Model

The Mark III International Transmission Model: Specification

The Mark III International Transmission Model: Estimates

International Transmission of Monetary and Fiscal Shocks under Pegged and Floating Exchange Rates: Simulation Experiments

The Importance of Oil Price Changes in the 1970s World Inflation

Actual versus Unanticipated Changes in Aggregate Demand Variables: A Sensitivity Analysis of the Real-Income Equation

Capital Flows, Sterilization, Monetary Policy, and Exchange Intervention

Sterilization and Monetary Control: Concepts, Issues, and a Reduced-Form Test

Short-Run Independence of Monetary Policy under a Pegged Exchange-Rates System: An Econometric Approach

Effects of Open Market Operations and Foreign Exchange Market Operations under Flexible Exchange Rates

An Alternative Approach to International Capital Flows

International Price Movements

International Price Behavior and the Demand for Money

Movements in Purchasing Power Parity: The Short and Long Runs

The United States as an Exogenous Source of World Inflation under the Bretton Woods System

Conclusions

Conclusions on the International Transmission of Inflation

Data Appendix James R. Lothian with the assistance of Anthony Cassese

Author Index

Subject Index

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