01742cas a2200241 a 4500 AALejournalIMF003393 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451841695 1018-5941 BD-DhAAL BD-DhAAL Scacciavillani, Fabio. Long Memory Processes and Chronic Inflation : Detecting Homogeneous Components in a Linear Rational Expectation Model / Fabio Scacciavillani. Washington, D.C. : International Monetary Fund, 1994. 1 online resource (66 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper is an empirical study of the links between monetary variables and inflation based on Cagan's equation and its rational expectations solution, when the forcing variable is a fractionally integrated process. As demonstrated by Hamilton and Whiteman, the existence of bubbles and other extraneous influences can be detected only by verifying the difference in the order of integration between the monetary base and the price level series. This paper shows that a fractionally differenced model overcomes Evans' critique of this test and that chronic inflation is essentially a monetary phenomenon caused by fiscal imbalance. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1994/002 Full text available on IMF http://elibrary.imf.org/view/journals/001/1994/002/001.1994.issue-002-en.xml IMF e-Library