The Inflation Adjustment Act included an initial "catch-up" adjustment that was intended to bridge the inflationary gap
for civil penalties that have not been recently adjusted.
Kumara Swamy proposed the unique and well-researched Kumara Swamy Theorem of Inflationary Gap
in his convocation lecture on Inflation and Economic Development of Nigeria delivered at the Institute of Management and Technology, Enugu, Nigeria on March 3, 1978.
Before Milton Friedman (1953) included "Discussion of the Inflationary Gap
" in his Essays in Positive Economics, he added seven paragraphs to his 1942 American Economic Review article with the same title.
(35) In 1940, in "How to Pay for the War," John Maynard Keynes popularized the concept of the "inflationary gap
" as an analytical tool for assessing inflation risk.
We can see that on average inflation and inflationary gap
are very close to each other and except GDP growth rate all other variables (inflation, monetary growth rate and inflationary gap
) have almost same volatility with standard deviation ranging from 5.70 to 5.97.
The inflationary gap
between countries integrated in the Euro zone is clearly moving away from the convergence observed on the launch of the single currency, by the ECB is confident this divergence will peter out and convergence of rates be restored.Intervention.The ECB President recalled that his institution does have one instrument at its disposal, namely intervention on the foreign exchange markets.
The resultant "inflationary gap
" as measured by the difference between the rates of monetary expansion and GDP growth was one of the major causes of inflation in the country.
TESTING OF THE KUMARA SWAMY THEOREM OF INFLATIONARY GAP
IN SELECTED COUNTRIES AND TRADE BLOCS
According to the SBP Annual Report the high "inflationary gap
", as measured by the difference between the rates of monetary expansion and GDP growth, extended over several years including 1994-95, was the main cause of inflation in Pakistan.
Later, however, Keynes  addressed himself to the effects of inflation and advanced a theory which has since become a basis for the 'inflationary gap
This paper empirically tests the Kumara Swamy Theorem of the Inflationary Gap
for the 19 countries that are included in G-20 designation over the period 1999-2012.
The high "inflationary gap
" as measured by the difference between the rates of monetary expansion and GDP growth, extended over several years including 1994-95, was the main cause of inflation in Pakistan.