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Non-Monetary Effects On Inflation Within The Price-Gap Model, Leonard Loebach
Non-Monetary Effects On Inflation Within The Price-Gap Model, Leonard Loebach
Masters Theses
The purpose of this thesis is to examine some of the various non-monetary effects on inflation within the framework of the price-gap model. Some of the non-monetary shocks that can affect inflation include wage adjustments, changes in basic commodity prices (for example, crude oil), changes in the exchange rates, and shifts in inflationary expectations.
In April of 1989, a study was put out by the Federal Reserve (staff study 157) that examined the relationship between the current price level and an estimate of the long-run equilibrium price level. In the study, an indicator P* (pronounced P-star) was used to estimate …