Inflation Bias, Time Inconsistency of Monetary and Fiscal Policies and Institutional Quality
In developing countries, weak institutional quality can increase the probability of applying discretionary policies and can have a great impact on their double-digit inflation. Surico (2008) calculated inflation bias, but he considered just monetary policy and he did not pay attention to the institu...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
University of Sistan and Baluchestan
2017-10-01
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| Series: | International Journal of Business and Development Studies |
| Subjects: | |
| Online Access: | https://ijbds.usb.ac.ir/article_3396_5dc9dec08669027248e6a324c64db458.pdf |
| _version_ | 1797803317816983552 |
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| author | Ali Hussein Samadi Hussein Marzban Sakine Owjimehr |
| author_facet | Ali Hussein Samadi Hussein Marzban Sakine Owjimehr |
| author_sort | Ali Hussein Samadi |
| collection | DOAJ |
| description | In developing countries, weak institutional quality can increase the probability of applying discretionary policies and can have a great impact on their double-digit inflation. Surico (2008) calculated inflation bias, but he considered just monetary policy and he did not pay attention to the institutions. Therefore, we design a model which considers the discretion in monetary and fiscal policies and the effect of the institutional quality. Then we calculate the inflation bias resulting from time inconsistency of monetary and fiscal policies by solving our model.
In fact, we used a Barro- Gordon type model for our purpose. After solving the model, sensitivity analysis is done. The experimental results of the model, for Iran’s economy as a developing country, show high degree of inflation bias during 1991-2016 , furthermore, the weak institutional quality have positive effects on inflation bias. |
| first_indexed | 2024-03-13T05:19:00Z |
| format | Article |
| id | doaj.art-4657152c1ed242c291606510f4ee72aa |
| institution | Directory Open Access Journal |
| issn | 2538-3302 2538-3310 |
| language | English |
| last_indexed | 2024-03-13T05:19:00Z |
| publishDate | 2017-10-01 |
| publisher | University of Sistan and Baluchestan |
| record_format | Article |
| series | International Journal of Business and Development Studies |
| spelling | doaj.art-4657152c1ed242c291606510f4ee72aa2023-06-15T16:55:44ZengUniversity of Sistan and BaluchestanInternational Journal of Business and Development Studies2538-33022538-33102017-10-0191274510.22111/ijbds.2017.33963396Inflation Bias, Time Inconsistency of Monetary and Fiscal Policies and Institutional QualityAli Hussein SamadiHussein MarzbanSakine OwjimehrIn developing countries, weak institutional quality can increase the probability of applying discretionary policies and can have a great impact on their double-digit inflation. Surico (2008) calculated inflation bias, but he considered just monetary policy and he did not pay attention to the institutions. Therefore, we design a model which considers the discretion in monetary and fiscal policies and the effect of the institutional quality. Then we calculate the inflation bias resulting from time inconsistency of monetary and fiscal policies by solving our model. In fact, we used a Barro- Gordon type model for our purpose. After solving the model, sensitivity analysis is done. The experimental results of the model, for Iran’s economy as a developing country, show high degree of inflation bias during 1991-2016 , furthermore, the weak institutional quality have positive effects on inflation bias.https://ijbds.usb.ac.ir/article_3396_5dc9dec08669027248e6a324c64db458.pdftime inconsistencyinstitutional qualityinflation bias |
| spellingShingle | Ali Hussein Samadi Hussein Marzban Sakine Owjimehr Inflation Bias, Time Inconsistency of Monetary and Fiscal Policies and Institutional Quality International Journal of Business and Development Studies time inconsistency institutional quality inflation bias |
| title | Inflation Bias, Time Inconsistency of Monetary and Fiscal Policies and Institutional Quality |
| title_full | Inflation Bias, Time Inconsistency of Monetary and Fiscal Policies and Institutional Quality |
| title_fullStr | Inflation Bias, Time Inconsistency of Monetary and Fiscal Policies and Institutional Quality |
| title_full_unstemmed | Inflation Bias, Time Inconsistency of Monetary and Fiscal Policies and Institutional Quality |
| title_short | Inflation Bias, Time Inconsistency of Monetary and Fiscal Policies and Institutional Quality |
| title_sort | inflation bias time inconsistency of monetary and fiscal policies and institutional quality |
| topic | time inconsistency institutional quality inflation bias |
| url | https://ijbds.usb.ac.ir/article_3396_5dc9dec08669027248e6a324c64db458.pdf |
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