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Nonlinear Effects of Inflation and Wage Policy on Firm Sustainable Growth in Vietnam

Author

Listed:
  • Nguyen Huu Anh

    (National Economics University, Hanoi, Vietnam)

  • Duong Thi Chi

    (National Economics University, Hanoi, Vietnam)

Abstract

This study examines the effects of consumer price index (CPI) and regional minimum wage policy on firms' sustainable growth from both economic and social perspectives. Using a balanced panel of 146 agricultural and manufacturing firms in Vietnam over 2011-2022 (1,752 firm-year observations), the analysis employs panel data regression models to estimate both linear and nonlinear effects. The results reveal clear evidence of inverted U-shaped relationships between CPI and the economic aspect of firm sustainable growth, indicating that moderate inflation promotes growth while excessive inflation constrains it. For the social aspect-measured by employees' income growth, minimum wage policy show positive effects within certain thresholds, but the effects weaken beyond those levels. To ensure robustness, the system GMM approach is applied, and the results remain consistent. Overall, the findings provide firm-level evidence on how inflation and wage policies influence sustainable growth and offer implications for balanced policy design in emerging markets.

Suggested Citation

  • Nguyen Huu Anh & Duong Thi Chi, 2025. "Nonlinear Effects of Inflation and Wage Policy on Firm Sustainable Growth in Vietnam," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 11(2), pages 250-269.
    • Handle: RePEc:men:journl:v:11:y:2025:i:2:p:250-269
    DOI: 10.11118/ejobsat.2025.012
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    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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