What triggers inflation in emerging market economics?
AbstractEmerging market economies (EMEs) have experienced a noticeable decline in inflation since the mid-1990s. Whether this stable price environment in EMEs is likely to endure and what kind of policies need to be followed to ensure price stability, however, still continue to be questions of considerable policy relevance. The authors investigate the factors associated with the start of 24 inflation episodes in 15 EMEs between 1980 and 2001. They use pooled probit analysis to estimate the contribution of the key factors to inflation starts. Their empirical results suggest that increases in the output gap, agricultural shocks, and expansionary fiscal policy raise the probability of inflation starts in EMEs. Their findings also indicate that a more democratic environment and an increase in capital flows relative to GDP reduce the probability of inflation starts.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3376.
Date of creation: 01 Aug 2004
Date of revision:
Environmental Economics&Policies; Markets and Market Access; Banks&Banking Reform; Economic Theory&Research; Settlement of Investment Disputes; Environmental Economics&Policies; Economic Theory&Research; Markets and Market Access; Access to Markets; Financial Intermediation;
Other versions of this item:
- Ilker Domaç & Eray M. Yücel, 2005. "What Triggers Inflation in Emerging Market Economies?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(1), pages 141-164, April.
- Ilker Domac & Eray M. Yucel, 2003. "What Triggers Inflation in Emerging Market Economies?," Working Papers 0307, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- NEP-ALL-2004-08-16 (All new papers)
- NEP-MAC-2004-09-12 (Macroeconomics)
- NEP-MON-2004-08-16 (Monetary Economics)
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