International Monetary Fund. Asia and Pacific Dept
due to high incidence of non-communicable diseases.
The medium-term outlook is vulnerable to the scaling down of the RPC as refugees are expected to be transferred to other countries, entailing a substantial decline in RPC revenue. With limited access to borrowing, fiscal spending would have to adjust accordingly. Inflation is projected to remain low, in line with the economic slowdown, inflationinAustralia, and low commodity prices.
Executive Board Assessment 2
Executive Directors welcomed the first Article IV consultation with Nauru. They noted that
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database. The chart below suggests strong correlation between the exchange rate and inflation.
Foreign inflation ( Δpf ): Foreign inflation is proxied by inflationinAustralia, as Australia is the largest trading partner for Papua New Guinea. Australian inflation data has been extracted from the INS database. The chart shows some positive correlation between inflation in PNG and Australia.
Oil prices ( Δpoil ): In Papua New Guinea, changes in world crude oil prices are mostly incorporated and passed through to the final pump price one month after. Hence, the lagged
Mr. Paul Cashin, Mr. Kamiar Mohaddes, and Mr. Mehdi Raissi
Meteorological Society 80 , 1819 – 1827 . 10.1175/1520-0477(1999)080<1819:IOENOG>2.0.CO;2
Chudik , A. and M. H. Pesaran ( 2013 ). Econometric Analysis of High Dimensional VARs Featuring a Dominant Unit . Econometric Reviews 32 ( 5–6 ), 592 – 649 . 10.1080/07474938.2012.740374
Chudik , A. and M. H. Pesaran ( 2014 ). Theory and Practice of GVAR Modeling . Journal of Economic Surveys, forthcoming .
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