The Relationship between Inflation and Inflation Uncertainty in the UK: 1885-1998
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Fountas, S. (2000) "The Relationship between Inflation and Inflation Uncertainty in the UK: 1885-1998" (Working Paper No. 0048) Department of Economics, National University of Ireland, Galway.
Using a long series of UK inflation data, I have provided strong evidence in favour of the hypothesis that inflationary periods are associated with high inflation uncertainty. This result supports the Friedman-Ball hypothesis and has important implications for the inflation-output relationship provided that more inflation uncertainty leads to lower output.