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Inflation and Development: Central Bank Stabilization Policies Revisited

Author

Listed:
  • Anis Chowdhury

    (University of Western Sydney)

  • Jomo Kwame Sundaram

    (Khazanah Research Institute)

Abstract

Against the backdrop of an inflationary surge due to war, sanctions and pandemic disruptions, the article argues against dogmatic responses to inflation. Using extant theoretical and empirical literature as well as time-series data, it examines the scope for ‘moderate inflation rates’, above what is currently targeted. Specifically, it seeks to ascertain the potential developmental gains from moderate inflation (say, 10–15%), the risk of inflation accelerating to harm growth, and the implications of central bank independence during the recent inflation episode and for supporting sustainable development.

Suggested Citation

  • Anis Chowdhury & Jomo Kwame Sundaram, 2023. "Inflation and Development: Central Bank Stabilization Policies Revisited," Development, Palgrave Macmillan;Society for International Deveopment, vol. 66(1), pages 3-14, June.
    • Handle: RePEc:pal:develp:v:66:y:2023:i:1:d:10.1057_s41301-023-00359-2
    DOI: 10.1057/s41301-023-00359-2
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    More about this item

    Keywords

    Inflation targeting; Growth; Monetary policy; Central bank independence; Sustainable development;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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