2006
DOI: 10.1353/mcb.2006.0064
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Abstract: Economists generally accept the proposition that high inflation rates generate inefficiencies that reduce society's welfare and economic growth. However, determining the causes of the worldwide diversity of inflationary experiences is an important challenge not yet satisfactorily confronted by the profession. Based on a dataset covering around 100 countries for the period 1960-1999 and using modern panel data econometric techniques to control for endogeneity, this paper shows that a higher degree of political … Show more

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Cited by 162 publications
(153 citation statements)
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“…Very substantial external vulnerabilities can induce added pressures for insurrection and significant currency depreciation which could lead to high levels of inflation. There is also a general consensus among economists that high inflation could generate inefficiencies that eventually lead to social unrest due to reduction in economic growth and general social welfare (Aisen & Veiga, 2006). Greater flexibility in trade and government expenditure could influence access to employment and other economic opportunities.…”
Section: Datamentioning
confidence: 99%
See 2 more Smart Citations
“…Very substantial external vulnerabilities can induce added pressures for insurrection and significant currency depreciation which could lead to high levels of inflation. There is also a general consensus among economists that high inflation could generate inefficiencies that eventually lead to social unrest due to reduction in economic growth and general social welfare (Aisen & Veiga, 2006). Greater flexibility in trade and government expenditure could influence access to employment and other economic opportunities.…”
Section: Datamentioning
confidence: 99%
“…In the same vein, according to Fung (2009, p. 59 (GDPg, trade, government expenditure, external balance, population growth) influence governance, unemployment and inflation, the reverse incidence is also possible as the deterioration of governance affects economic prosperity and other macroeconomic variables in the conditioning information set. For example, while there is a wide consensus among economists that inflation reduces society's welfare value as a result of poor governance, it is no less true that the quality of institutions favor political stability (Aisen & Veiga, 2006 …”
Section: Estimation Techniquementioning
confidence: 99%
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“…7 Aisen and Veiga (2005a) show that a de jure measure of openness taken from the Index 5 Catao and Terrones (2005) present a model in which …scal de…cits cause in ‡ation via the seigniorage channel and provide evidence consistent with the model. Click (1998) and Aisen and Veiga (2005b) provide empirical evidence on the determinants of seigniorage and in ‡ation respectively, and both studies are motivated from a public …nance perspective. 6 Razin (2005) develops a micro-founded model in which trade and …nancial openness increase society's aversion to unexpected in ‡ation.…”
Section: Openness and In ‡Ation Volatilitymentioning
confidence: 99%
“…The empirical results contribute to a literature which finds that political instability is associated with short-term oriented macroeconomic policies. In the context of monetary policy, Cukierman et al (1992) and Aisen and Veiga (2006) show that countries with higher political instability tend to have higher inflation. …”
Section: Resultsmentioning
confidence: 99%