The Steady Inflation Rate of Economic Growth

Mardi Dungey, John Pitchford

    Research output: Contribution to journalArticle

    Abstract

    This paper considers the existence of a path of GDP corresponding to steady inflation in the prices of domestic goods. We estimate the steady inflation rate of growth, denoted the SIRG, at a little over 4 per cent p.a. in the post-float period in Australia. Changes in inflation are modelled as a nonlinear combination of growth and changes in import price inflation. Because import price inflation is more volatile than overall inflation, policy that targets overall inflation may require growth to fluctuate considerably, whereas growth can be steady if the target is steady inflation of domestic goods' prices.
    Original languageEnglish
    Pages (from-to)386-400
    JournalEconomic Record
    Volume76
    Issue number235
    Publication statusPublished - 2000

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