So the country (like so many others in the East and South of Europe) must now make a major shift from non-tradeables
to tradeables, and this in the context of a currency peg (and a significant level of external indebtedness) is not going to be an easy task.
Inflation pressures are expected to lessen, although price trends for some non-tradeables
inflation remain of concern.
Iran's macroeconomic policies over the past decade defy logic...[with an inflation rate of over 31%]...and real interest rates on the order of minus 10-15%...[T]he exchange rate, although categorized as a managed float, has moved in a narrow range of about 10% to the US dollar...but prices of non-tradeables
have increased...with Tehran's real estate prices increasing by about 1,500-2,000% over the last 10 years, resulting in a highly overvalued currency...
Although consumer price inflation is currently within the 1-3% target range, non-tradeables
inflation remains substantially in excess of this.
Blanchard (2007) has recently argued in a different context that, after several years of depressed output, producers of non-tradeables
might have permanently lower productivity through hysteresis effects and might also lack the wherewithal (financial and other) to expand in response to the price signals.
He rejects any all-inclusive explanation, including the oft-mentioned phenomenon of "Dutch Disease," in which resource rents effectively displace other export sectors and transfer domestic production to less sustainable non-tradeables
, as well as a host of other single causal factors in the economic, political or social structures of the OPEC states.
In Japan, where publishers work a good deal more quickly (the Japanese non-tradeables
sector, it will be recalled, is supposed to be lacking in competition and mired in inefficiency), Britain's Resurrection: Japan's Failure and the book under review appeared almost simultaneously.
Iquitos and Belem, the region's other two major rubber ports, experienced a similar pattern of urban economic development, accompanied by all of the accoutrements of a burgeoning non-tradeables
sector in a boom-time economy.
inflation also diminished but remained relatively high, at an estimated 4 per cent in 1997.
This paper develops a general equilibrium model of North-South trade with different wage setting regimes and a non-tradeables
However, if capital inflow is used for the production of nontradeables then the conversion of foreign exchange in domestic currency Will increase the money supply and as a result the prices of non-tradeables
will go up causing an appreciation of the real exchange rate.
Non-food and non-energy consumer price inflation fell from a relatively stable rate of 6 1/2-7 per cent in the period 1987-92 to 5 per cent at the end of 1993.(7) The fall in inflation in services -- from almost 9 per cent in 1991 and 1992 to 6.8 per cent in December 1993 -- is an even more TABULAR DATA OMITTED positive development, considering that inflation stickiness in the service sectors and the associated wide inflation gap between goods and services had been particular characteristics of the strong inflation pressures and expectations in Spain since the mid-1980s.(8) In addition to a change in inflation expectations related to the generalised slack, the decline in inflation in non-tradeables
was also affected by specific policy initiatives.