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NBER Working Papers and Publications
|January 1997||Why Does Inflation Differ across Countries?|
with Jeffrey A. Miron
in Reducing Inflation: Motivation and Strategy, Christina D. Romer and David H. Romer, Editors
|April 1996||Why Does Inflation Differ Across Countries?|
with Jeffrey A. Miron: w5540
This paper attempts to explain the differences in inflation performance across countries. Earlier research has examined this topic, but it has considered only some of the factors that might be empirically important determinants of inflation rates. We consider the distaste for inflation, optimal tax considerations, time consistency issues, distortionary non-inflation policies and other factors that might be empirically important determinants of inflation performance. Overall, the results suggest that institutional arrangements - central bank independence or exchange rate mechanisms - are relatively unimportant determinants of inflation performance, while economic fundamentals - openness and optimal tax considerations - are relatively important determinants.