What Triggers Inflation in Emerging Market Economics?
Emerging 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, howe...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/08/5141948/triggers-inflation-emerging-market-economics http://hdl.handle.net/10986/14123 |
| Summary: | Emerging 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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