The next in a series of open research seminars was held at the National Bank of Ukraine on 17 May 2017 as part of the Annual Research Conference "The Role of the Central Bank in Economic Development”. The seminar was conducted by Dr. Laurence Ball, Professor of Economics at Johns Hopkins University and a Research Associate at the National Bureau of Economic Research, who has been a visiting scholar or fellow at numerous central banks, including the Federal Reserve, the Bank of England, the Bank of Japan, and the Reserve Bank of New Zealand.
During the seminar, Dr. Laurence Ball presented the findings of his research, the topic of which is important for Ukraine considering that in 2015 the NBU switched to a new monetary regime, i.e. inflation targeting. In his paper, Dr. Laurence Ball examined the behavior of inflation in India.
Presenting his research findings Dr. Ball explained the fundamental drivers of inflation and described the simple Philips curve model. As follows from India’s data, the model explains much of the behavior of core inflation in India in recent years.
The research findings suggest that actual headline inflation feeds into expected inflation and future core inflation. Meanwhile, the research findings have confirmed that headline inflation is more volatile than core: it fluctuates due to large changes in the relative prices of certain industries, which are largely industries that produce food and energy.
The researcher points out that several aspects of India’s inflation process are similar to inflation in advanced economies in the 1970s and 80s. Dr. Laurence Ball underlined that that unlike the case of developed countries, where commitment to an inflation target has led to an anchoring of inflation expectations, maintaining stable inflation may be costlier to output stability in India.
The researcher said that the new prospective question for his study is whether inflation behavior will change under the Reserve Bank of India new monetary framework.
During discussion the participants debated the feasibility of classic Philips curve for description of inflation in Ukraine considering the openness of the economy. Another important point for discussion was the estimation of sacrifice ratio in the economies with high inflation.
Dr. Ball shared his opinion on the appropriate inflation targets in conditions of small open economy and monetary policy measures conducive to the achievement of these targets.
The research presented on the seminar was published by Dr. Ball in сo-authorship with Anusha Chari and Prachi Mishra.
Please follow the link below to view the research paper in English.
The video of the seminar is available at the following link.
We invite potential contributors to participate in the upcoming seminars and present the findings of their research studies. To this end, please send your submissions (presentation materials and/or an article, CV, with an indication of a suitable date for the seminar to take place) to the Research Division of the Monetary Policy and Economic Analysis Department for consideration via e-mail to:[email protected]