What Triggers Inflation in Emerging Market Economies?

Abstract

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. This study aims at investigating the factors associated with the start of 24 inflation episodes in 15 EMEs between 1980 and 2001. The paper employs pooled probit analysis to estimate the contribution of the key factors to inflation starts. The empirical results suggest that increases in the output gap, agricultural shocks, and expansionary fiscal policy raise the probability of inflation starts in EMEs. The findings also indicate that a more democratic environment and an increase in capital flows relative to GDP reduce the probability of inflation starts.JEL classification: E31; E58.

Food Inflation in South Africa: Some Implications for Economic Policy

“…More specifically, they identify an inflationary episode as a period when trend inflation increases by at least 2 percentage points from trough to peak with the trough being preceded by at least four quarters of stable or declining trend inflation. However, Domac and Yucel (2004) consider a lower threshold – namely a 1 percentage point rise from trough to peak – as being more appropriate for emerging countries given their longer periods of high inflation. Following Boschen and Weise (2003), the following steps can be used to identify inflation episodes:…”

“…Table 5 depicts the details of the inflationary episodes experienced by South Africa since 1960. A lower threshold of a minimum 1% rise from trough to peak as advocated by Domac and Yucel (2004) was used in the identification of inflation episodes 24…”

Global Factors Driving Inflation and Monetary Policy: A Global VAR Assessment

“…Mohanty and John (2015) using a time varying SVAR model find that the output gap is a major determinant of inflation in India in boom periods. Domaç and Yücel (2005) find that demand drives inflation in emerging markets, besides, food prices and fiscal policies. The pro-cyclicality of inflation seems to be sensitive to the time period considered (Primiceri, 2005;Cogley et al, 2010).…”

Tarim Ürünleri̇-Gida Fi̇yat Artişlari Ve Enflasyon Arasindaki̇ İli̇şki̇ni̇n İncelenmesi̇

“…Ayrıca gıda fiyatları hava şartlarına ve dış ticaret kısıtlamalarına bağlı olarak değişkenlik gösterme eğiliminde olduğu belirtilmiştir. Domaç ve Yücel (2003), 15 gelişmekte olan piyasa ekonomisindeki enflasyon dönemlerini probit modelleri ile inceledikleri çalışmada, gıda üretimindeki büyüme oranı arttığında artan enflasyona neden olan dönemlerin başlama olasılığının düştüğüne ilişkin kanıtlar sunmaktadırlar. Çıplak ve Yücel(2004) Sınır testi iki aşamadan oluşmaktadır.…”