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Economic Growth and Inflation Tradeoffs within Global Stagflation: Evidence in Vietnam Economy

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  • Ly Dai Hung

    (Vietnam Institute of Economics, Hanoi, Vietnam)

Abstract

The paper analyzes the interaction of economic growth and inflation rate on accounting for both capital sources and global shocks. The analysis method is a time varying coefficients Bayesian vector autoregression (TVC-BSVAR) model applied in a quarterly data sample of Vietnam economy over Q3/2008-Q4/2020. The trade-off between growth and inflation exists for an increase of credit supply but mitigates for an increase of public investment or more foreign capital inflows. For a global stagflation, Vietnam economic growth reduces but its inflation rate stabilizes. An appropriated policy can be the combination of higher credit supply growth with more public investment. If the world economic growth reduces by 1% per quarter and world oil price raises by 1 USD per quarter for 4 consecutive quarters, the domestic economic growth reduces by 4% after one year. Then, the domestic credit supply growth needs to be raised by 7.6% or the public investment increases by 12%.

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  • Ly Dai Hung, 2022. "Economic Growth and Inflation Tradeoffs within Global Stagflation: Evidence in Vietnam Economy," Working Papers hal-03774248, HAL.
    • Handle: RePEc:hal:wpaper:hal-03774248
    Note: View the original document on HAL open archive server: https://hal.science/hal-03774248
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    Keywords

    Global Stagflation; Vector Autoregression; Vietnam Economy;
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