Measuring Undeylying inflation in Papua New Guinea

Measuring Underlying inflation in Papua New Guinea.pdf

This paper assesses the value of the Bank of Papua New Guinea’s underlying

inflation measures: exclusion-based and trimmed mean. Results indicate that

whilst the exclusion-based measure is an unbiased estimator of CPI inflation, the

trimmed mean has a small and negative bias with respect to CPI inflation.

Evidence also suggests that when a gap emerges between CPI inflation and

underlying inflation, CPI inflation tends to adjust toward both underlying inflation

measures and also towards a constant rate of inflation. It was additionally

observed that whilst underlying inflation did not adjust toward CPI inflation, both

measures tended to adjust toward a constant rate of inflation. The paper

concludes that both underlying inflation measures are good indicators of CPI

inflation and that, at present, the trimmed mean measure is preferred over the

exclusion-based.

Abstract

Determinants of Exchange Rate in PNG: Is the Kina a commodity currency

Determinants of Exchange Rate in PNG: Is the Kina a commodity currency.pdf

Since the kina was floated in 1994 its US dollar value has undergone substantial fluctuations. This paper estimates a model of the determinants of the kina/US dollar exchange rate using quarterly data from 1995-2005. The value of the kina is found to be highly dependent on the international price of Papua New Guinea’s commodity exports. A 10 percent increase in commodity prices is estimated to cause the kina to appreciate by 4 percent immediately and by a further 6 percent in two quarters time. No other variable has a robust effect on the value of the kina. These results support the view that Papua New Guinea is highly vulnerable to external commodity price shocks.

Abstract

Research Paper on Economic Growth and Foreign Direct Investment

Foreign Direct Investment and Economic Growth in PNG.pdf

This paper uses cointegration techniques to establish whether there

is any long run relationship between foreign direct investment inflows and gross domestic product in Papua New Guinea. The paper also tests for Granger Causality between the two variables. The results show that there is a long run relationship and evidence of bi-causality between foreign direct investment inflows and gross domestic product growth. In the medium term, growth in foreign direct investment ‘Granger causes’ growth in gross domestic product. Between four and five years after the FDI inflow there is strong evidence of reverse causality.

Abstract

Research in Papua New Guinea

Research is one fo the key areas that discovers the un-discovere and try to establish linkages. Every action has a reaction, a pebble thrown into a pond creates ripples. Research tries to establish, how fast or with how much effort the pebble was thrown into the lake and measure the speed of the ripples. Likewise, research tries to establish linkages in the system, whether it be, science, social science etc.

In Papua New Guinea, economic research presents quiet a challenge because of non-availability of data. Non collection of up-to-date data by the National Statistics Office has not been helpful for researchers to establish system linakages to provide better guidelines for policy formulation.