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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, inflation in Australia, and low commodity prices. Executive Board Assessment 2 Executive Directors welcomed the first Article IV consultation with Nauru. They noted that

Tao Sun

.1942] R eferences Bank of Thailand , Inflation Report , January 2004 . Britton , E. , P. Fisher , and J. Whitley , “ The Inflation Report Projections: Understanding the Fan Chart ”, Bank of England . Brouwer , G. , and N. R. Ericsson , 1998 , “ Modeling Inflation in Australia ”, Journal of Business & Economic Statistics , October . 10.1080/07350015.1998.10524783 Cecchetti , S. G. , 1995 , “ Inflation Indicators and Inflation Policy ”, National Bureau of Economic Research, Working Paper 5161 . Dickey , D. A. , and W

Souvik Gupta and Mr. Magnus Saxegaard

/269 ( Washington : International Monetary Fund ). 10.5089/9781451868326.001 Heath , Alexandra , Ivan Roberts , and Tim Bulman , 2004 , “ Inflation in Australia: Measurement and Modeling ”, in The Future of Inflation Targeting , ed. by Christopher Kent and Simon Guttmann ( Sydney : Reserve Bank of Australia )/ Kearns , J , 1998 , “ The Distribution and Measurement of Inflation ”, Research Discussion Paper No. 9810 ( Sydney : Reserve Bank of Australia ). Kwiatkowski , Denis , and others, 1992 , “ Testing the Null Hypothesis of

Mr. Francis Y Kumah

References Blavy , Rodolphe , 2004 , “ Inflation and Monetary Pass-Through in Guinea ,” IMF Working Paper 04/223 ( Washington : International Monetary Fund ). 10.5089/9781451875324.001 Brouwer , G. , and N. R. Ericsson , 1998 , “ Modeling Inflation in Australia ,” Journal of Business and Economic Statistics , Vol. 16 , No. 4 , pp. 433 - 449 . Canova , F. , and Bruce E. Hansen , 1995 , “ Are Seasonal Patterns Constant Over Time? A Test for Seasonal Stability ,” Journal of Business and Economic Statistics , Vol. 13

International Monetary Fund

database. The chart below suggests strong correlation between the exchange rate and inflation. Foreign inflation ( Δpf ): Foreign inflation is proxied by inflation in Australia, 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 . Debelle , G. and G. Stevens ( 1995 ). Monetary Policy Goals for Inflation in Australia . Reserve Bank of Australia Research Discussion

Mr. Bogdan Lissovolik

Working Paper No. 07/24 ( January ). De Brouwer , G. , and N. Ericsson , 1998 “ Modeling Inflation in Australia ,” Journal of Business and Economic Statistics , Vol. 16 , No 4 , pp. 433 – 449 . de Nardis , S. , 2007 “ Modalità del cambiamento industriale: occupazione, specializazzione, imprese ,” mimeo ( June ). Drummond , P. , 2007 , “ Italy: How Large is the External Competitiveness Gap? ” Italy— Selected Issues , IMF Country Report No. 07/64 , pp. 3 – 14 . Escolano , J. , 2008 , “ Competitiveness of the Southern euro area