CBSI – Griffith Working Papers

In October 20th 2017, the Central Bank of Solomon Islands (CBSI) and Griffith University (GU) of  Australia signed a Memorandum of Understanding to facilitate and enhance joint research activities aimed at developing capacity for research and policy formulation at CBSI in the next 5 years. This initiative will enhance the research skills of CBSI officers and equip them to recommend evidenced – based policy that is supported by empirical research. Completed research papers are published on this site with their downloadable links.

1. Do inflation expectation matter for small open economies? Empirical evidence from the Solomon Islands’, Griffith University- South Pacific Central Banks Joint Policy Research Working Paper No.9. 2019.               

By Vitarina H Takana, Angeline H Bata’anisia, Tarlok Singh, Jen-Je Su, Parmendra Sharma  

This is the first study to examine the dynamics of inflation expectations in Solomon Islands, using the Hybrid New Keynesian Phillips Curve framework and quarterly data for the period 2003-2017. The estimation uses the standard Ordinary Least Squares, the General Method of Moments and the Fully Modified Ordinary Least Squares methods. The study finds that both backward-looking and forward-looking behaviour of firms matter for inflation. The study also finds that fuel prices, output gap and real effective exchange rate are important indicators of current inflation. Policy implications are discussed.