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Inflation in Low-Income Countries / Jongrim Ha.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Ha, Jongrim.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Commodities.
- External Shock.
- Heterogeneous Panel Var Model.
- Inflation.
- Inflation Expectations.
- Low-Income Country.
- Macroeconomic Management.
- Macroeconomics and Economic Growth.
- Monetary Policy.
- Terms of Trade Shock.
- Local Subjects:
- Commodities.
- External Shock.
- Heterogeneous Panel Var Model.
- Inflation.
- Inflation Expectations.
- Low-Income Country.
- Macroeconomic Management.
- Macroeconomics and Economic Growth.
- Monetary Policy.
- Terms of Trade Shock.
- Physical Description:
- 1 online resource (42 pages)
- Place of Publication:
- Washington, D.C. : The World Bank, 2019.
- System Details:
- data file
- Summary:
- This paper studies the effects of global and domestic inflation shocks on core price inflation in 105 countries between 1970 and 2016, by using a heterogeneous panel vector-autoregressive model. The methodology allows accounting for differences across groups of countries (advanced economies, emerging markets and developing economies, and low-income countries) and across groups with different country characteristics (such as foreign exchange and monetary policy regimes). The empirical results indicate that most of the variation in inflation among low-income countries over the past decades is accounted for by external shocks. More than half of the variation in core inflation rates among low-income countries is due to global core price shocks, compared with one-eighth in advanced economies. Global food and energy price shocks account for another 13 percent of core inflation variation in low-income countries-half more than in advanced economies and one-fifth more than in emerging markets and developing economies. This points to challenges in anchoring domestic inflation expectations, which have been most evident among low-income countries with floating exchange rates, especially in cases where central bank independence has been weak.
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