The International Transmission of Inflation

Michael R. Darby, James R. Lothian

University of Chicago Press, 1983 - Business & Economics - 727 pages

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.

Contents

• Introduction and Summary: 3
• The Postwar Institutional Evolution of the International Monetary System: 14
• The International Data Base An Introductory Overview: 46
• The Timing of Monetary and Price Changes and the International Transmission of Inflation: 58
• The Mark III International Transmission Model: 83
• The Mark III International Transmission Model Specification: 85
• The Mark III International Transmission Model Estimates: 113
• International Transmission of Monetary and Fiscal Shocks under Pegged and Floating Exchange Rates Simulation Experiments: 162
• The Importance of Oil Price Changes in the 1970s World Inflation: 232
• Actual versus Unanticipated Changes in Aggregate Demand Variables A Sensitivity Analysis of the RealIncome Equation: 273
• Capital Flows Sterilization Monetary Policy and Exchange Intervention: 289
• Sterilization and Monetary Control Concepts Issues and a ReducedForm Test: 291
• ShortRun Independence of Monetary Policy under a Pegged ExchangeRates System An Econometric Approach: 314
• Effects of Open Market Operations and Foreign Exchange Market Operations under Flexible Exchange Rates: 349
• An Alternative Approach to International Capital Flows: 380
• International Price Movements: 419
• International Price Behavior and the Demand for Money: 421
• Movements in Purchasing Power Parity The Short and Long Runs: 462
• The United States as an Exogenous Source of World Inflation under the Bretton Woods System: 478
• Conclusions: 491
• Conclusions on the International Transmission of Inflation: 493
• Data Appendix: 525
• Author Index: 719
• Subject Index: 722

Bibliographic information

• Title: The International Transmission of Inflation; Monograph / National Bureau of Economic Research; National Bureau of Economic Research Monograph
• Authors: Michael R. Darby, James R. Lothian
• Editor: Michael R. Darby
• Edition: illustrated
• Publisher: University of Chicago Press, 1983
• ISBN: 0226136418, 9780226136417
• Length: 727 pages
• Subjects: Business & Economics / Inflation; Business & Economics / International / General; Political Science / Political Economy; Reference / General