Fiscal Determinants Of Inflation

Author : Domenico Fanizza
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 22 pages
Book Rating : 4.31/5 ( download)

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Download or read book Fiscal Determinants of Inflation written by Domenico Fanizza and published by International Monetary Fund. This book was released on 2006-10 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Many countries in the Middle East and North Africa (MENA) region have recently experienced surges in money growth that apparently have not generated significant inflationary pressures. Moreover, several MENA countries have followed monetary policy rules that according to standard monetary theory should have produced macroeconomic instability and possibly hyperinflation. We argue that the Fiscal Theory of the Price Level could usefully provide insights on these developments. Our main conclusion is that a sound fiscal position constititutes a necessary condition for macroeconomic stability whereas "sound" monetary policy is neither sufficient nor necessary. Hence, fiscal policy and public debt deserve particular attention for maintaining macroeconomic stability, by and large consistent with Fund policy advice to MENA countries."

Author : Mr.Carlo Cottarelli
Publisher : International Monetary Fund
ISBN 13 : 1451844018
Total Pages : 30 pages
Book Rating : 4.16/5 ( download)

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Download or read book The Nonmonetary Determinants of Inflation written by Mr.Carlo Cottarelli and published by International Monetary Fund. This book was released on 1998-03-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explains inflation performance in a sample of industrial and transition economies by looking at policymakers’ incentives to inflate the economy, and the perceived costs of disinflation. It finds a significant effect of fiscal deficits on inflation, particularly (but not exclusively) in countries where the government securities market is not well developed. Other factors with significant effect on inflation include relative price changes, central bank independence, the exchange rate regime, and the degree of price liberalization; there is only limited evidence that other structural factors, such as those influencing the natural rate of unemployment, have a significant effect on inflation.

Author : Mr.Bogdan Lissovolik
Publisher : International Monetary Fund
ISBN 13 : 1451854927
Total Pages : 37 pages
Book Rating : 4.23/5 ( download)

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Download or read book Determinants of Inflation in a Transition Economy written by Mr.Bogdan Lissovolik and published by International Monetary Fund. This book was released on 2003-06-01 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines determinants of inflation in Ukraine during 1993-2002 in a cointegrating framework. Two basic theoretical models-a markup and a money market model-are tested. While broad money is cointegrated with the CPI for the whole sample and for early subsamples, the cointegration ceases to be statistically significant between 1996-2002, in part because of strong remonetization. The mark-up model offers a more consistent and well-fitting overall framework for 1996-2002 data, pointing inter alia to a greater role of administered prices in the CPI within a fairly mainstream inflation process. The "long-term" monetary transmission mechanism operates through the exchange rate and wages, but broad money clearly enters short-term inflation determinants. Prudent macroeconomic policies, grain harvests, and administrative decisions explain the sharp decline of inflation over 2000-2002.

Author : Ilker Domaç
Publisher : World Bank Publications
ISBN 13 :
Total Pages : 43 pages
Book Rating : 4./5 ( download)

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Download or read book The Main Determinants of Inflation in Albania written by Ilker Domaç and published by World Bank Publications. This book was released on 1998 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: June 1998 This study of inflation in Albania yields several conclusions: * Fighting inflation and keeping exports competitive requires cuts in the budget deficit and credit to government. * The strong seasonal inflation can be somewhat ameliorated by improving infrastructure and customs services. * Structural reforms and improved infrastructure should be part of all stabilization programs, because growth reduces inflation. Domac and Elbirt investigate the behavior and determinants of inflation in Albania, using three approaches. They * Decompose inflation into four components: seasonal, cyclical, trend, and random. * Rely on the widely used Granger causality test, using disaggregated data on both the consumer price index (CPI) and key economic variables. * Apply cointegration and error-correction techniques to the process of inflation, using a simple theoretical model. Using the first approach, they conclude that inflation exhibits strong seasonal patterns associated with agriculture seasonality. Peaks and troughs of monetary aggregates correspond to those of inflation, with a two-month lag. The exchange rate also exhibits stable seasonality, reaching its trough in August and tending to depreciate early in the year. The Granger causality test shows M1 (currency in circulation plus demand deposits) and the exchange rate to have predictive content for most items of the CPI. The empirical findings also indicate that credit to government is a good predictor of medical care, transportation, and communication prices. But causality also runs from the prices of bread and cereals, recreation, education, and culture to credit to government, since these items, at least during the period under consideration, are subsidized and contribute to the budget deficit. And causality runs from credit to government to the price of nontradables, highlighting the fact that an increase in the fiscal deficit would undermine Albania's competitiveness by producing appreciation in the real exchange rate. The results of cointegration and error-correction techniques confirm that, in the long run, inflation is positively related to both money supply and the exchange rate, and negatively related to real income. A 1-percent increase in M1, for example, will raise inflation by 0.41 percent; a 1-percent depreciation of the exchange rate will increase inflation by 0.17 percent; whereas a 1-percent increase in real income will reduce inflation by 0.25 percent. Inflation adjusts to its equilibrium value fairly rapidly-25 percent a month. The impact of the exchange rate on inflation occurs a month later, while the impact of real income and money take place two and four months later, respectively. The findings support the conventional elements of a typical stabilization program. Fighting inflation and keeping exports competitive requires reducing both the budget deficit and credit to government. The strong seasonal nature of inflation can be somewhat ameliorated by improving infrastructure and customs services. Structural reforms and improvements in infrastructure should be part of any stabilization program because economic growth is an antidote to inflation. This paper-a joint product of the Albania/Croatia Country Unit, Europe and Central Asia Region, and the Poverty Reduction and Economic Management Sector Unit, East Asia and Pacific Region-is part of a larger effort in the Bank to enhance the knowledge on the inflationary process and its practical implications. The authors may be contacted at [email protected] or [email protected].

Author : Alvin Harvey Hansen
Publisher : Pickle Partners Publishing
ISBN 13 : 1789127416
Total Pages : 197 pages
Book Rating : 4.16/5 ( download)

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Download or read book Monetary Theory and Fiscal Policy written by Alvin Harvey Hansen and published by Pickle Partners Publishing. This book was released on 2018-12-02 with total page 197 pages. Available in PDF, EPUB and Kindle. Book excerpt: IN TRADITIONAL economics the theory of money and the theory of output have been treated separately with little or no tendency toward integration. First Wicksell and then Keynes gave impetus to the movement to combine the theory of money with that of output as a whole. Drawing on classical economics and the modern aggregate analysis of Keynes, Professor Hansen in this volume succeeds in writing a book which, unlike the classical studies, shows the importance of money in the theory of output as a whole; and which, unlike numerous modern writings (e.g., of Hawtrey, Douglas, Hayek), avoids overemphasizing the importance of money. Here is a book that shows what monetary policy can and cannot achieve and why it has often failed in the past; the necessary supplementary role of monetary policy as an aid to fiscal policy; and the manner of integrating monetary and fiscal policy, in periods of both depression and inflation, as prerequisites for assuring a stable economy. Professor Hansen has drawn on his rich experience over thirty-five years in the study of cycles, fiscal policy, and international economics, and on his many years as an economic practitioner to write a book that makes use of the riches of classical economics, as well as neoclassical and Keynesian economics. The book should, for many years to come, be the standard work on monetary theory and fiscal policy as determinants of output. The reader will find here not only the modern theory of money and fiscal policy, but also rich surveys covering the last 150 years, reinterpreted with the tools of modern economics. He will find also suggestions, based on theory and history, for a policy in the years to come that will yield the high levels of income and stability without which the survival of democratic institutions is most unlikely.

Author : H. Elif Ture
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 35 pages
Book Rating : 4.55/5 ( download)

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Download or read book Determinants of Inflation in Iran and Policies to Curb It written by H. Elif Ture and published by International Monetary Fund. This book was released on 2022-09-09 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: High and volatile inflation has been an endemic economic and social issue in Iran that has contributed to rising poverty and social tensions. For policymakers to effectively address the inflation problem, it is critical to understand its causes. This paper seeks to contribute to this endeavor by applying a vector error-correction model to study the short- and long-term determinants of inflation in Iran over the past two decades and identify policy options to curb it. Using quarterly data spanning 2004-2021, it finds that money growth drives inflation only in the long term, while currency depreciation, fiscal deficits, and sanctions (proxied by oil exports) drive inflation both in the short- and the long term. In the absence of a removal of US trade and financial sanctions that could significantly boost the rial, budget deficits will have to be adjusted to contain inflation, albeit gradually to avoid hindering the recovery. Over the medium term, strengthening the inflation targeting framework could help improve monetary transmission and contain inflation durably.

Author : Martin Weale
Publisher : Routledge
ISBN 13 : 1317379438
Total Pages : 403 pages
Book Rating : 4.30/5 ( download)

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Download or read book Macroeconomic Policy written by Martin Weale and published by Routledge. This book was released on 2015-10-05 with total page 403 pages. Available in PDF, EPUB and Kindle. Book excerpt: This analysis of macroeconomic policy, originally published in 1989, argues that key government objectives, such as reduced inflation, decreased unemployment and an adequate level of national saving can be achieved only by employing both monetary and fiscal policies, in conjunction with supply-side policies expressly designed to improve the workings of the labour market. Part 1 is a comparative analysis showing the effects of monetary and fiscal policy on the economy. Real-wage rigidity in the labour market is shown to have important consequences for the working of both types of policy, because it conditions the economy’s response to tax changes. Part 2 presents an econometric model which combines consistent stock-flow accounts with a full range of expectational effects. Part 3 presents an innovative technique for solving rational expectations models with the need for arbitary terminal conditions.

Author : Mr.Gary G. Moser
Publisher : International Monetary Fund
ISBN 13 : 145184980X
Total Pages : 25 pages
Book Rating : 4.06/5 ( download)

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Download or read book The Main Determinants of Inflation in Nigeria written by Mr.Gary G. Moser and published by International Monetary Fund. This book was released on 1994-06-01 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides a selective review of the literature on the determinants of inflation in Nigeria, analyzes the dominant factors influencing inflation, presents the empirical results of a reduced-form elasticities model, and discusses the policy implications of the empirical results. The results of this analysis confirm the basic findings of earlier studies, namely that monetary expansion, driven mainly by expansionary fiscal policies, explains to a large degree the inflationary process in Nigeria. Other important factors are the devaluation of the naira and agroclimatic conditions. With respect to the depreciation of the naira, it was found that concurrent fiscal and monetary policies had a major influence on its impact on inflation. Given the considerable role of food commodities in the CPI, agroclimatic conditions (rainfall) were found to play a significant role in overall movements in prices and should be fully taken into consideration in any analysis of the inflationary process in Nigeria.

Author : Samuel A. Laryea
Publisher :
ISBN 13 : 9788290584967
Total Pages : 17 pages
Book Rating : 4.62/5 ( download)

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Download or read book Determinants of Inflation in Tanzania written by Samuel A. Laryea and published by . This book was released on 2001 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Author : Dong Frank Wu
Publisher : International Monetary Fund
ISBN 13 : 1475585985
Total Pages : 30 pages
Book Rating : 4.88/5 ( download)

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Download or read book Understanding Inflation in Malawi written by Dong Frank Wu and published by International Monetary Fund. This book was released on 2017-03-09 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on the role of the pass-through of the exchange rate and policydeterminants in driving inflation. Using linear and nonlinear frameworks, the paper finds: (i) after the switch to a floating exchange rate regime in 2012, nonfood prices not only directly influence headline inflation, but also have an significant impact on food inflation via second round effects; (ii) the pass-through of the exchange rate to headline inflation has jumped from zero to 11 percent under the floating regime, after controlling for other factors; (iii) the improved significance of T-bill rates in shaping inflation flags its importance in Malawi’s monetary framework although the monetary transmission mechanism needs further strengthening; (iv) the increased impact of broad money underscores the necessity for fiscal discipline and central bank independence.