Abstract
This paper examines the relationship between inflation and real income in Australia, Canada, Finland, New Zealand, Spain, Sweden and the UK which have adopted a "formal" policy of low or zero inflation target. Using cointegration analysis and a vector error correctin model (VECM), we find that the long-run relationship between inflation and real income is positive in most cases. We further find that contrary to the belief of new-classical economics, government expenditure too is positively related to real income in the long-run.
Original language | English |
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Pages (from-to) | 240-250 |
Number of pages | 11 |
Journal | Journal of Economic Studies |
Volume | 29 |
Issue number | 3 |
DOIs | |
Publication status | Published - 2002 |
Keywords
- central government
- cointegration
- income
- inflation (finance)
- money
- policy
- Policy
- Money
- Central government
- Inflation
- Cointegration
- Income