Inflation and Budget Deficit: What is the Relationship in Portugal?

The main causes of Portuguese inflation, based on annual data from 1954 to 1995, using the Johansen method, allows us to conclude that variation in Portuguese inflation is determined essentially by foreign inflation and by variation in the effective exchange rate of the Portuguese Escudo (PTE). In the long-term, the relationship between inflation rate and the growth rate of unit labour costs is almost unitary. However, the response of inflation change to the equilibrium error between inflation rate and changes in unit labour costs is slow and almost insignificant, while the response of unit labour costs to this disequilibrium is fast and significant, what suggests that the direction of causality is much more evident from the inflation rate on unit labour costs, than the reverse. The budget deficit as a percentage of GDP, are not significant in the short-term, in relation to variation in inflation as a dependent variable. However, it is significant in the relation to unit labour costs as a dependent variable, so we can have an indirect positive relation between inflation and lagged budget deficit.Inflation, Budget Deficit, Unit Roots, and Cointegration

The Phillips Curve in Portugal

This paper estimates the Phillips curve in Portugal using the Johansen Method, with the wage inflation rate as a dependent variable, based on annual data from the period 1954-1995. The main conclusions are as follows. Firstly, in the long term, the wage inflation rate relates positively to the inflation rate and negatively to the unemployment rate, as expected. There is also a positive relationship between the wage inflation rate and the average labour productivity growth index. Secondly, in the short term, the variation of the wage inflation rate relates negatively and significantly to the error correction mechanism with a negative unitary coefficient; therefore, there is a quick and significant response to the equilibrium error between the wage inflation rate and its determinants. Besides this adjustment, the wage inflation rate responds positively to a lagged wage inflation rate. The variation in the unemployment rate and the average labour productivity growth present the expected signal, negative and positive respectively, but without significance in the short term. The dummy that refers to the April 1974 revolution is significant

Inflação e Défice Orçamental: Que Relação em Portugal?

Os principais determinantes da variação da inflação no período 1954-95 parecem ser a inflação externa (ou a sua variação) e a variação da taxa de câmbio efectiva do escudo. Verifica-se uma relação de longo prazo entre a taxa de inflação e a taxa de variação dos custos unitários de trabalho quase unitária, mas a resposta da variação da inflação ao erro de equilíbrio entre a taxa de inflação e a variação dos custos unitários é lenta e quase insignificante ao passo que a resposta dos custos unitários de trabalho a esse desequilíbrio é rápida e significativa o que sugere que a direcção de causalidade é muito mais pronunciada da taxa de inflação para os custos de trabalho, do que ao contrário. Isto parece significar que os salários se ajustam imediatamente ao crescimento da inflação, enquanto a inflação se ajusta lentamente ao crescimento dos salários. O saldo do Sector Público Administrativo em percentagem do PIB (SPA) não é significativo na relação de curto prazo, na equação da inflação, no entanto, é significativo na equação dos custos unitários de trabalho, o que pode implicar relação positiva indirecta entre a variação da inflação e o défice orçamental desfasado

Inflação Portuguesa: pelos custos ou monetária?

O estudo das causas da inflação portuguesa no período 1954-95 com base em dados anuais, através da abordagem de Johansen permite-nos concluir que a variação da inflação portuguesa é essencialmente determinada pela variação da inflação externa e pela variação da taxa de câmbio efectiva do Escudo. Em termos de longo prazo obtivemos uma relação entre taxa de inflação e taxa de crescimento dos custos unitários de trabalho quase unitária, mas a resposta da variação da inflação ao erro de equilíbrio entre taxa de inflação e variação dos custos unitários de trabalho é lenta e quase insignificante ao passo que a resposta dos custos unitários de trabalho a esse desequilíbrio é rápida e significativa. A variação do stock nominal de moeda corrigido pela taxa de crescimento real do PIB não se apresenta como variável significativa na relação de curto prazo como determinante da variação da inflação, o que nos leva a concluir que temos inflação determinada essencialmente pelos custos neste período da economia portuguesa. Os custos fortemente significativos na relação de curto prazo são a inflação dos produtos importados (traduzidos quer pela inflação externa, quer pela variação da taxa de câmbio efectiva)

Simulations of Antigenic Variability in Influenza A

Computational models of the immune system (IS) and pathogenic agents have several applications, such as theory testing and validation, or as a complement to first stages of drug trials. One possible application is the prediction of the lethality of new Influenza A strains, which are constantly created due to antigenic drift and shift. Here, we present several simulations of antigenic variability in Influenza A using an agent-based approach, where low level molecular antigen-antibody interactions are explicitly described. Antigenic drift and shift events are analyzed regarding the virulence of emergent strains against the IS. Results are discussed from a qualitative point of view taking into account recent and generally recognized immunology and influenza literature

The Phillips Curve in Italy

The estimation of the Phillips curve in Italy, using the wage inflation rate as a dependent variable, based on annual data from the period 1961-2012, using the Johansen Method, allows us to conclude two things. Firstly, in the long term, there are two long-term relationships: the wage inflation rate relates positively to the inflation rate, negatively to the unemployment rate and positively to the average labour productivity growth index, as was expected; the inflation rate relates positively to the wage inflation rate, negatively to the unemployment rate and positively to the average labour productivity growth index, as was expected. Secondly, in the short term, the variation of the wage inflation rate relates positively and significantly to the error correction mechanism of the first long-term relationship; therefore, there is a significant response to the equilibrium error between the wage inflation rate and its determinants (inflation rate, unemployment rate, labour productivity growth index). Besides this adjustment, the variation of wage inflation rate responds significantly and negatively to the variation in unemployment rate and significantly and positively to the average labour productivity growth

BUDGET DEFICIT CAUSES INFLATION? APPLICATION TO PORTUGAL

The analysis of Portuguese inflation, based on annual data from 1961 to 2012, using the Johansen Method, allows us to conclude that variation in Portuguese inflation is determined essentially by foreign inflation and by variation in the effective exchange rate, but the lagged variation of budget deficit seems to causes variation of inflation in the studied period. In the long run there are two long-run relationships. Both the inflation rate and the wage inflation rate relate positively with the General Government Balance in percentage of GDP, negatively with the exchange rate index, positively with the foreign inflation index and negatively with the trend. In the short run the variation of the inflation rate relates positively with foreign inflation (or its variation) and the variation in the effective exchange rate, relates negatively with the error correction mechanism, so there is a significant response to the equilibrium error between inflation rate and its determinants. In addition to this adjustment, the inflation rate responds positively and significantly to the lagged variation of the budget deficit, as expected.The analysis of Portuguese inflation, based on annual data from 1961 to 2012, using the Johansen Method, allows us to conclude that variation in Portuguese inflation is determined essentially by foreign inflation and by variation in the effective exchange rate, but the lagged variation of budget deficit seems to causes variation of inflation in the studied period. In the long run there are two long-run relationships. Both the inflation rate and the wage inflation rate relate positively with the General Government Balance in percentage of GDP, negatively with the exchange rate index, positively with the foreign inflation index and negatively with the trend. In the short run the variation of the inflation rate relates positively with foreign inflation (or its variation) and the variation in the effective exchange rate, relates negatively with the error correction mechanism, so there is a significant response to the equilibrium error between inflation rate and its determinants. In addition to this adjustment, the inflation rate responds positively and significantly to the lagged variation of the budget deficit, as expected