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Regionalized liquidity: A cross-country analysis of mobile money deployment and inflation in developing economies

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  • Qiu, Christina M.

Abstract

Mobile money has been hailed as a serious innovation in the pursuit of financial inclusion and poverty alleviation; however, its macroeconomic effect is not fully understood. This study presents a regional theory of inflation and argues that limited market integration contributes to mobile money’s inflationary effects. Household survey data from Kenya confirms increased use of mobile money after village- and supra-village-level shocks due to risk-sharing between liquidity-flexible and liquidity-constrained regions. A difference-in-differences empirical assessment indicates that mobile money deployment increases national consumer price indices. Findings support that the power to distribute equals the power to generate money supply in developing countries.

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  • Qiu, Christina M., 2022. "Regionalized liquidity: A cross-country analysis of mobile money deployment and inflation in developing economies," World Development, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:wdevel:v:152:y:2022:i:c:s0305750x2100396x
    DOI: 10.1016/j.worlddev.2021.105781
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    Cited by:

    1. George Kosgei Kiptum, 2022. "Relationship between Kenya’s economic growth and inflation," SN Business & Economics, Springer, vol. 2(12), pages 1-16, December.

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    More about this item

    Keywords

    Money supply; Quantity theory of money; Food price; Smallholder agriculture; Mobile money; Financial inclusion;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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