Comments and Questions

The paper elaborates on earlier work by Biagio Bossone on the so-called “portfolio theory of inflation” (PTI). It is probably fair to say that the place of this theory in the overall universe of theories on business cycle and economy policy remains unsettled. This paper provides an extensive presentation of the theory following by some suggestive empirical evidence. A key weakness of the paper is that it does not explicate its contribution to science. As a matter of fact, it does not relate PTI to the already very voluminous literature in the fields considered (including e.g. the fiscal theory of inflation). The literature review in Section 2 consists of one paragraph and cites one paper besides Bossone’s own 2019 paper. The literature list is very short and several of the citations are to debate papers or working papers. The results of the empirical investigation are at best suggestive. It is again symptomatic that no other studies are cited and that the empirical specification is not related to other studies in the literature. The specifications are unrefined and do not appear to address identification issues. Moreover, the splitting of the sample of countries into “high credibility” (HC) and “low credibility” (LC) countries appears subjective and may not be independent of the desired research outcome. There may be other empirical methods that could provide insights into the raised research question. Karsten StaehrTallinn University of Technology, Estonia