TY - BOOK ID - 84540179 TI - Long Memory Processes and Chronic Inflation : Detecting Homogeneous Components in a Linear Rational Expectation Model PY - 1994 SN - 1462373321 1455241369 1281088803 9786613774262 1455230154 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Inflation KW - Money and Monetary Policy KW - Public Finance KW - Economic Theory KW - Price Level KW - Deflation KW - Monetary Policy, Central Banking, and the Supply of Money and Credit: General KW - Fiscal Policy KW - Expectations KW - Speculations KW - Time-Series Models KW - Dynamic Quantile Regressions KW - Dynamic Treatment Effect Models KW - Diffusion Processes KW - Central Banks and Their Policies KW - Macroeconomics KW - Monetary economics KW - Economic theory & philosophy KW - Monetary base KW - Hyperinflation KW - Fiscal policy KW - Rational expectations KW - Money KW - Prices KW - Economic theory KW - Money supply KW - Argentina UR - https://www.unicat.be/uniCat?func=search&query=sysid:84540179 AB - This paper is an empirical study of the links between monetary variables and inflation based on Cagan’s equation and its rational expectations solution, when the forcing variable is a fractionally integrated process. As demonstrated by Hamilton and Whiteman, the existence of bubbles and other extraneous influences can be detected only by verifying the difference in the order of integration between the monetary base and the price level series. This paper shows that a fractionally differenced model overcomes Evans’ critique of this test and that chronic inflation is essentially a monetary phenomenon caused by fiscal imbalance. ER -