Revisiting the mean reversion of inflation rates for 22 OECD countries

This study applies a flexible Fourier stationary test, proposed by Becker et al. (2006) to investigate the mean reversion of inflation in 22 OECD countries over the period of 1961 to 2011. While traditional unit root tests give us mixed results, empirical results from our flexible Fourier stationary test indicate that mean reversion of inflation holds in all 22 OECD countries. Our results have important policy implications for the 22 OECD countries under study.

► Fourier stationary test investigates the mean reversion of inflation. ► Traditional unit root tests give us mixed results. ► Fourier stationary test indicates that mean reversion of inflation holds. ► Results have important policy implications for the 22 OECD countries under study.