01882cas a2200265 a 4500 AALejournalIMF004621 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451929355 1018-5941 BD-DhAAL BD-DhAAL Laxton, Douglas. Asymmetric Effects of Economic Activityon Inflation : Evidence and Policy Implications / Douglas Laxton, Guy Meredith, David Rose. Washington, D.C. : International Monetary Fund, 1994. 1 online resource (48 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 examines the evidence on asymmetries in the effects of activity on inflation. Data for the G-7 countries are found to strongly support the view that the inflation-activity relationship is nonlinear, with high levels of activity raising inflation by more than low levels decrease it. In the face of such asymmetries, the average level of output in an economy subject to demand shocks will be below the level of output at which there is no tendency for inflation to rise or fall, contrary to the implications of linear models. One implication of these results is that policymakers can raise the average level of output over time by responding promptly to demand shocks, thus reducing the variance of output around trend. Mode of access: Internet Meredith, Guy. Rose, David. IMF Working Papers; Working Paper ; No. 1994/139 Full text available on IMF http://elibrary.imf.org/view/journals/001/1994/139/001.1994.issue-139-en.xml IMF e-Library