Monetary Policy and Leading Indicators of Inflation in Sweden

By Josef Baumgartner, Göran Zettergren, Ramana Ramaswamy

April 1, 1997

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Josef Baumgartner, Göran Zettergren, and Ramana Ramaswamy. Monetary Policy and Leading Indicators of Inflation in Sweden, (USA: International Monetary Fund, 1997) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper derives a set of leading indicators of inflation for Sweden. It also discusses methodological and policy issues pertaining to the estimation of these indicators. The main findings are: (1) narrow money is the most powerful leading inflation indicator; (2) broad money and inflation expectations have significant predictive information on inflation; (3) the output gap, interest rates, and the credit aggregate have some predictive information on inflation, and this information is confined to a shorter time horizon than either the monetary aggregates or inflation expectations; and (4) implied forward rates have only weak predictive information on inflation.

Subject: Cyclical indicators, Economic growth, Exchange rates, Foreign exchange, Inflation, Inflation targeting, Monetary policy, Nominal effective exchange rate, Prices

Keywords: Cyclical indicators, Exchange rates, GDP deflator, Inflation, Inflation expectation, Inflation report, Inflation targeting, Inflation well, Leading indicators, Nominal effective exchange rate, Real GDP, Sweden, Time horizon, Underlying inflation, WP, Yield curve

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1997/034
Stock No:

WPIEA0341997
ISBN:

9781451978926
ISSN:

1018-5941

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