Trend Inflation In Moderate And Low Inflation Periods: The Implication Of Thai Monetary Policy

Authors

Nipit Wongpunya, Chulalongkorn UniversityFollow

Document Type

Article

Abstract

This paper examines the effects of trend inflation on the conduct of monetary policy during moderate and low inflation environments in Thailand. It extends the New Keynesian model by introducing a positive trend inflation. It finds that the response of inflation and output are lower during the moderate inflation period. A high level of trend inflation magnifies the welfare loss. The optimal policy is to lower weight on output volatility when the target level for inflation is higher. To adjust the inflation targeting rate, the central bank should consider the response of inflation and output gap to preserve the determinacy.

Recommended Citation

Wongpunya, Nipit (2023) "Trend Inflation In Moderate And Low Inflation Periods: The Implication Of Thai Monetary Policy," Bulletin of Monetary Economics and Banking: Vol. 26: No. 3, Article 3.
DOI: https://doi.org/10.59091/2460-9196.1797
Available at: https://bulletin.bmeb-bi.org/bmeb/vol26/iss3/3

First Page

445

Last Page

468

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Thailand

Affiliation

Chulalongkorn University