What Triggers Inflation in Emerging Market Economies?

Domaç, Ilker; Yücel, Eray

doi:10.1007/s10290-005-0019-7

Cited by 23 publications

(22 citation statements)

References 26 publications

(27 reference statements)

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“…The results support the theoretical results of Catão and Terrones (2005), who point out that a given change in the deficit-to-GDP ratio has a stronger impact in higher-inflation economics. The results are consistent with the empirical studies of De Haan and Zelhorst (1990), Fischer et al (2002), Catão and Terrones (2005), and Domaç and Yücel (2005).…”

Section: Deficits To Inflationsupporting

confidence: 93%

“…In addition, they find a non-linear relationship between deficits and inflation, and the impact of deficits on inflation is significant when the deficit-to-GDP ratio is above 5%. Domaç and Yücel (2005) investigate 15 emerging markets from 1980 to 2001 by pooled probit estimation and discover that government deficits are a significantly positive factor of high inflation.…”

Section: Literature Reviewmentioning

confidence: 99%

“…For example, empirical studies of the United States (Hamburger and Zwick, 1981;Dwyer, 1982;Darrat, 1985;Ahking and Miller, 1985;King and Plosser, 1985), and those of other industrial or developed countries (King and Plosser, 1985;Giannaros and Kolluri, 1986;Protopapadakis and Siegel, 1987; Barnhart and Darrat, 1988) have not yielded conclusive results on the deficit-inflation relationship. Meanwhile, empirical studies of developing countries, such as those of De Haan and Zelhorst (1990), Metin (1998), Loungani and Swagel (2003), and Domaç and Yücel (2005), generally indicate that the inflationary effect of deficit financing is insignificant, but do find a significant causality of fiscal deficits on inflation in high-inflation countries.…”

Section: Introductionmentioning

confidence: 96%

See 2 more Smart Citations

Are fiscal deficits inflationary?

Lin

Chu

2013

Journal of International Money and Finance

105

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Section: Deficits To Inflationsupporting

confidence: 93%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 96%

See 1 more Smart Citation

Are fiscal deficits inflationary?

Lin

Chu

2013

Journal of International Money and Finance

105

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“…There are some studies for the US (Hamburger and Zwick [25]; Dwyer [26]; Darrat [27]; Ahking and Miller [28]) and the others are related to developed countries (King and Plosser [29]; Giannaros and Kolluri [30]; Protopapadakis and Siegel [31]; Barnhart and Darrat [32]). About these topics, there are lots of papers for some other countries (Ho [33]; Siddiqui [34]; Burdekin and Wohar [35]; De Haan and Zelhorst [36]; Choudhary and Parai [37]; Buiter and Patel [38]; Dogas [39]; Sowa [40]; Hondroyiannis and Papapetrou [41] Metin [42]; Metin [43]; Domac and Yucel [44]; Lin and Chu [45]; Jalil, Tariq and Bibi [6]). …”

Section: Literature Reviewmentioning

confidence: 99%

“…Test results advance that budget deficits have a positive effect on the inflation for these countries. Domac and Yucel [44] examine the factors of inflation with pooled probit analysis for 15 emerging markets in the period from 1980 to 2001. Paper findings show that output gap, agricultural shocks and expansionary fiscal policies are efficient on the inflation in these countries.…”

Section: Literature Reviewmentioning

confidence: 99%

Revisit the Budget Deficits and Inflation: Evidence from Time and Frequency Domain Analyses

Tiwari¹,

Bolat²,

Koçbulut³

2015

TEL

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The purpose of this paper is to test the relationship between budget deficits and inflation for nine EU countries during the period of 1990-2013 using the quarterly data. Recently, the public deficits and inflation have had an increasing importance for developing/emerging and developed countries to build the stability macroeconomic performance in the long run. This study is the first attempt to determine the relationship between the inflation and budget deficits for nine EU countries using different bootstrap causality tests. We employ the bootstrap causality and Granger causality test in the frequency domain analysis which allows us to distinguish short and long-run causality. We do not find a relationship between these variables when we employ bootstrap causality analysis. While the frequency domain causality shows that there is no relationship causality from budget deficits to inflation for all countries, causality from inflation to budget deficits indicates a permanent (long-run) relationship for Belgium, and France.

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Minimising the inflationary impact of fiscal deficits in Africa: The role of monetary, financial and political institutions

Agoba¹

2019

Int. J Fin Econ

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This is an examination of the relationship between fiscal deficits and inflation in Africa based on the premise that the characteristics of monetary, financial and political institutions, do impact the nature of this relationship. The study hypothesizes that, the inflationary effect of fiscal deficits is minimised when the central bank is independent (CBI) and the financial market is developed enough to contain inflationary expectations. This impact is much more effective given stronger political institutions. Using a panel data spanning 1970–2012 for 48 African countries, we use a Two Stage System Generalised Methods of Moments estimator, with Windmeijer (2005) corrected SE and collapsed instruments to address the issue of instrument proliferation. We also use various measures of central bank independence, financial development and political institutional quality. Fiscal deficits are inflationary in Africa. The positive effect of fiscal deficits on inflation is weakened when the degrees of Central Bank Independence (CBI) and financial development are higher. Financial development minimises the modulating impact of lower CBI on inflationary fiscal deficits. While stronger political institutions minimise the dampening effect of high central bank turnover on inflationary fiscal deficits, it enhances the positive impact of stronger central bank independence and financial development on minimising inflationary fiscal deficits. The results are robust to varying measures of CBI, financial development, and political institutions. Africa's financial sector should therefore be developed alongside strengthening the independence of central banks and ensuring that the quality of political institutions are enhanced in order to effectively curtail inflationary fiscal deficits.

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What Triggers Inflation in Emerging Market Economies?

Abstract: Inflation starts, emerging market economies, price level stability, probit analysis,

Cited by 23 publications

References 26 publications

Are fiscal deficits inflationary?

Are fiscal deficits inflationary?

Revisit the Budget Deficits and Inflation: Evidence from Time and Frequency Domain Analyses

Minimising the inflationary impact of fiscal deficits in Africa: The role of monetary, financial and political institutions

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