Title: The Role of Expectations in Inflation Dynamics in the Philippines - Has it Changed Following the Global Financial Crisis?
Abstract: This paper discusses the role of inflation expectations in the inflation dynamics of the Philippines since its adoption of inflation targeting in 2002. It places a particular focus on the post-crisis period. A key finding is that agents have become more forwardlooking with the adoption of inflation targeting. With the increased credibility of monetary policy, expected inflation started to weigh more on the pricing decisions of firms and households. Moreover, inflation expectations have become increasingly tied to the BSP’s inflation target, even in the face of the recent below-target inflation rate. The change in the inflation gap has the largest impact on inflation expectations, holding other factors constant. The other factors that affect inflation expectations include the policy interest rate, past inflation, past inflation volatility, nominal wage growth and industrial production growth.Full publication: Inflation Mechanisms, Expectations and Monetary Policy
Publication Year: 2016
Publication Date: 2016-11-01
Language: en
Type: article
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Cited By Count: 3
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