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Understanding Inflation in Emerging and Developing Economies

Author

Listed:
  • Jongrim Ha

    (World Bank, Development Prospects Group)

  • M. Ayhan Kose

    (World Bank, Development Prospects Group; Brookings Institution; CEPR, and CAMA)

  • Franziska L. Ohnsorge

    (World Bank, Development Prospects Group; CAMA)

Abstract

Emerging market and developing economies (EMDEs) have experienced an extraordinary decline in inflation since the early 1970s. After peaking in 1974 at 17.3 percent, inflation in these economies declined to 3.5 percent in 2017. Despite a checkered history of managing inflation among many EMDEs, disinflation occurred across all regions. This paper presents a summary of our recent book, “Inflation in Emerging and Developing Economies: Evolution, Drivers, and Policies,” that analyzes this remarkable achievement. Our findings suggest that many EMDEs enjoy the benefits of stability-oriented and resilient monetary policy frameworks, including central bank transparency and independence. Such policy frameworks need to be complemented by strong macroeconomic and institutional arrangements. Inflation expectations are more weakly anchored in EMDEs than in advanced economies. In EMDEs that do not operate inflation targeting frameworks, exchange rate movements tend to have larger and more persistent effects on inflation.

Suggested Citation

  • Jongrim Ha & M. Ayhan Kose & Franziska L. Ohnsorge, 2019. "Understanding Inflation in Emerging and Developing Economies," Koç University-TUSIAD Economic Research Forum Working Papers 1902, Koc University-TUSIAD Economic Research Forum.
    • Handle: RePEc:koc:wpaper:1902
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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • 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
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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