We have allowed for an extra 3% annual rise in the yuan against the dollar on top of the inflation gap of two percentage points.
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He supposes that the central bank wants to minimise the weighted sum of the square of the inflation gap and the square of the output gap.
They are upset about rising inflation and a widening gap between the rich and the poor.
EU-wide harmonised index of consumer prices, the gap between British inflation and those of France and Germany is smaller than on national measures.
So although the Bank has been able to draw on other sources of information, such as private-sector surveys, the lack of an official earnings series left a gap in its inflation-watching kit.
The Reserve Bank of India, the country's central bank, has flagged the current account gap along with high inflation as major constraints to rate cuts that many believe are necessary to revive economic growth.
Look at the reasons for the narrowing of the gap between British and continental inflation and interest rates, and this convergence turns out to be more apparent than real.
They consider inflation's principal determinants to be the gap between aggregate supply and demand and the public's expectations.
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About 40 percent of the gap is explained by the different inflation measures.
As long as a big output gap remains, downward pressure on inflation will persist even if growth perks up.
He added that the gap between the rate of income inflation between workers and the unemployed had "grown" in the last few years.
And given the gap between the need for beating inflation and the absence of investments that do so, there is a big opportunity for anyone who can figure out how to revive it.
They assign less importance to the gap between aggregate demand and supply in determining inflation, and more importance to the stance of monetary policy.
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If interest rates are 6% and inflation is 3% (ie, the same gap as before), and tax rates stays the same, the real interest rate is 1.2%.
Yet Bernanke seems to possess some Keynesian baggage, using such nomenclature as "aggregate demand, " "core inflation, " "potential output" and "output gap, " as though the economy were made up of interchangeable parts.
To fill the gap, fares will continue to rise by more than inflation (a 7% increase is scheduled in January).
However, the uncertainty about the valuation of asset prices is arguably no greater than the uncertainty about potential growth rates and hence the size of the output gap, which is at the heart of most central banks' inflation forecasts.
So we don't see inflation staying flat as long as those who follow just the existence of the output gap believe.
It is worried that lowering rates aggressively could stoke inflation, encourage imports and lead to a further widening in the current-account gap.
We expect rising inflation in H1 2013 as policy easing pushes growth above 8 percent and widens the output gap.
As I pointed out a while ago, one consequence of uprating benefits with inflation at a time of flat or falling real wages has been to help narrow the gap between rich and poor.
It is easy to see what Bernanke is missing: he thinks that low growth and high unemployment create some undefinable something called an output gap, which leads to other undefinables called resource slackness, and these undefinables protect us from inflation.
Argentina still suffers from a yawning credibility gap with investors, due to its shortsighted economic policies in general, and its meddling with the inflation figures in particular.
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