IDEAS home Printed from https://ideas.repec.org/a/sae/sagope/v13y2023i4p21582440231217848.html
   My bibliography  Save this article

Examining Determinants of Regional Inflation Heterogeneity — A Robust Panel Data Analysis

Author

Listed:
  • Syed Jaffar Abbas
  • Noman Arshed

Abstract

This study examines the impact of different factors on inflation in six regions of the world between 2002 and 2021, analyzing variables such as control of corruption, political stability, broad money growth, GDP growth, and imports to exports ratio. This study seeks to investigate the crucial factors that cause inflation and their significance in different regions. The feasible generalized least square (FGLS) results indicate that the determinants of inflation vary in different regions, but broad money growth consistently increases inflation across all six regions, while control of corruption and political stability reduce inflation in most regions. The study has business implications for political stability and its contribution to inflation control. This should be taken into account when making investment choices by businesses operating in politically insecure regions. The study also highlights how crucial it is to control the growth of broad money and comprehend how GDP growth and inflation are related. Policymakers should establish effective inflation control measures that take into consideration the unique elements driving inflation in their region. JEL Classification: E31, P24, P44

Suggested Citation

  • Syed Jaffar Abbas & Noman Arshed, 2023. "Examining Determinants of Regional Inflation Heterogeneity — A Robust Panel Data Analysis," SAGE Open, , vol. 13(4), pages 21582440231, December.
    • Handle: RePEc:sae:sagope:v:13:y:2023:i:4:p:21582440231217848
    DOI: 10.1177/21582440231217848
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/21582440231217848
    Download Restriction: no
    File URL: https://libkey.io/10.1177/21582440231217848?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. J. Cebula Richard & Frewer Michael, 1980. "Oil Imports And Inflation: An Empirical International Analysis Of The ‘Imported’ Inflation Thesis," Kyklos, Wiley Blackwell, vol. 33(4), pages 615-622, November.
    2. Farrokhi Balajadeh, Heshmatollah & Khochiani, Ramin & Asayesh, Hamid, 2019. "Investigating the Relationship between the Dynamics of Money Growth and Inflation in Iran: An Econophysical Analysis of the Quantity Theory of Money," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 6(2), pages 225-248, August.
    3. King Banaian & David M Kemme & Grigor Sargsyan, 2008. "Inflation Targeting in Armenia: Monetary Policy in Transition," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 50(3), pages 421-437, September.
    4. Burdekin, Richard C.K. & Denzau, Arthur T. & Keil, Manfred W. & Sitthiyot, Thitithep & Willett, Thomas D., 2004. "When does inflation hurt economic growth? Different nonlinearities for different economies," Journal of Macroeconomics, Elsevier, vol. 26(3), pages 519-532, September.
    5. Arusha Cooray & Naceur Khraief, 2019. "Money Growth and Inflation: New Evidence from a Nonlinear and Asymmetric Analysis," Manchester School, University of Manchester, vol. 87(4), pages 543-577, July.
    6. Mohamed Fenira, 2014. "Democracy: A Determinant Factor in Reducing Inflation," International Journal of Economics and Financial Issues, Econjournals, vol. 4(2), pages 363-375.
    7. Eggoh, Jude C. & Khan, Muhammad, 2014. "On the nonlinear relationship between inflation and economic growth," Research in Economics, Elsevier, vol. 68(2), pages 133-143.
    8. Jiang, Chun & Chang, Tsangyao & Li, Xiao-Lin, 2015. "Money growth and inflation in China: New evidence from a wavelet analysis," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 249-261.
    9. Eltejaei , Ebrahim & Montazeri Shoorekchali , Jalal, 2021. "Investigating the Relationship between Money Growth and Inflation in Turkey: A Nonlinear Causality Approach," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 16(3), pages 305-322, September.
    10. Esat Durguti & Qazim Tmava & Filloreta Demiri-Kunoviku & Enver Krasniqi & Wai Ching Poon, 2021. "Panel estimating effects of macroeconomic determinants on inflation: Evidence of Western Balkan," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1942601-194, January.
    11. Crowder, William J, 1998. "The Long-Run Link between Money Growth and Inflation," Economic Inquiry, Western Economic Association International, vol. 36(2), pages 229-243, April.
    12. Oscar Dancourt, 2015. "Inflation Targeting in Peru: The Reasons for the Success," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 57(3), pages 511-538, September.
    13. Mohsen Bahmani-Oskooee & Ilker Domaç, 2003. "On the Link between Dollarisation and Inflation: Evidence from Turkey1," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 45(3), pages 306-328, September.
    14. Michael Sarel, 1996. "Nonlinear Effects of Inflation on Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 199-215, March.
    15. Erdinc Telatar & Funda Telatar & Tarkan Cavusoglu & Umur Tosun, 2010. "Political instability, political freedom and inflation," Applied Economics, Taylor & Francis Journals, vol. 42(30), pages 3839-3847.
    16. Alsamara, Mouyad & Mrabet, Zouhair & Hatemi-J, Abdulnasser, 2020. "Pass-through of import cost into consumer prices and inflation in GCC countries: Evidence from a nonlinear autoregressive distributed lags model," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 89-101.
    17. Qaiser Munir & Kasim Mansur, 2009. "Non-Linearity between Inflation Rate and GDP Growth in Malaysia," Economics Bulletin, AccessEcon, vol. 29(3), pages 1555-1569.
    18. Muhammad Shahid Hassan & Muhammad Shahid Akbar & Ayesha Wajid & Noman Arshed, 2016. "Poverty, Urbanization and Crime: Are They Related in Pakistan?," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 4(9), pages 483-492, September.
    19. Muktadir-Al-Mukit, Dewan & Shafiullah, A. Z. M. & Ahmed, Md. Rizvy, 2013. "Inflation Led Import or Import Led Inflation: Evidence from Bangladesh," Asian Business Review, Asian Business Consortium, vol. 2(2), pages 65-69.
    20. Al-Marhubi, Fahim A., 2000. "Corruption and inflation," Economics Letters, Elsevier, vol. 66(2), pages 199-202, February.
    21. Thouraya BOUJELBENE, 2021. "Nonlinearity Relationship of Inflation and Economic Growth: Role of Institutions Quality," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 166-179, December.
    22. Saleem Ahmad & Noman Arshed & Sultan Salem & Yousaf Ali Khan & Kamran Hameed & Sanda Kam, 2022. "Role of globalziation defining the incidence of entrepreneurship," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-22, March.
    23. Khoutem Ben Jedidia & Thouraya Boujelbene Dammak & Helali Kamel, 2019. "Trade-threshold Effect on Inflation in Tunisia: New Evidence Resulting from a Nonlinear Approach," International Economic Journal, Taylor & Francis Journals, vol. 33(1), pages 149-169, January.
    24. Andrew Phiri, 2018. "Nonlinear impact of inflation on economic growth in South Africa: a smooth transition regression analysis," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 10(1), pages 1-17.
    25. Ben Ali Mohamed Sami & Sassi Seifallah, 2016. "The corruption-inflation nexus: evidence from developed and developing countries," The B.E. Journal of Macroeconomics, De Gruyter, vol. 16(1), pages 125-144, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Farooq Arby & Amjad Ali, 2017. "Threshold Inflation in Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 13, pages 1-19.
    2. Mothuti Gosego & Phiri Andrew, 2018. "Inflation-Growth Nexus in Botswana: Can Lower Inflation Really Spur Growth in the Country?," Global Economy Journal, De Gruyter, vol. 18(4), pages 1-11, December.
    3. Zheng, Zhijie & Huang, Chien-Yu & Yang, Yibai, 2021. "Inflation And Growth: A Non-Monotonic Relationship In An Innovation-Driven Economy," Macroeconomic Dynamics, Cambridge University Press, vol. 25(5), pages 1199-1226, July.
    4. López-Villavicencio, Antonia & Mignon, Valérie, 2011. "On the impact of inflation on output growth: Does the level of inflation matter?," Journal of Macroeconomics, Elsevier, vol. 33(3), pages 455-464, September.
    5. Hu, Ruiyang & Yang, Yibai & Zheng, Zhijie, 2021. "Inflation, endogenous quality increment, and economic growth," Mathematical Social Sciences, Elsevier, vol. 114(C), pages 72-86.
    6. Muhammad Khan & Waqas Hanif, 2020. "Institutional quality and the relationship between inflation and economic growth," Empirical Economics, Springer, vol. 58(2), pages 627-649, February.
    7. Hayat, Zafar & Balli, Faruk & Rehman, Muhammad, 2018. "Does inflation bias stabilize real growth? Evidence from Pakistan," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1083-1103.
    8. Madhu Sehrawat & A. K. Giri, 2015. "Re-examining the Threshold Effects in Inflation–Growth Nexus: Evidence from India," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(2), pages 57-67, Fabruary.
    9. Ehrhart, Hélène & Minea, Alexandru & Villieu, Patrick, 2014. "Debt, seigniorage, and the Growth Laffer Curve in developing countries," Journal of Macroeconomics, Elsevier, vol. 42(C), pages 199-210.
    10. Baharumshah, Ahmad Zubaidi & Slesman, Ly & Wohar, Mark E., 2016. "Inflation, inflation uncertainty, and economic growth in emerging and developing countries: Panel data evidence," Economic Systems, Elsevier, vol. 40(4), pages 638-657.
    11. Şerife Özşahin & Gülbahar Üçler, 2017. "The Consequences of Corruption on Inflation in Developing Countries: Evidence from Panel Cointegration and Causality Tests," Economies, MDPI, vol. 5(4), pages 1-15, December.
    12. Mandeya Shelton M.T & Ho Sin-Yu, 2022. "Inflation, Inflation Uncertainty and the Economic Growth Nexus: A Review of the Literature," Folia Oeconomica Stetinensia, Sciendo, vol. 22(1), pages 172-190, June.
    13. Ortiz, Isabel, & Cummins, Matthew. & Karunanethy, Kalaivani., 2015. "Fiscal space for social protection and the SDGs options to expand social investments in 187 countries," ILO Working Papers 994877663402676, International Labour Organization.
    14. Komain JIRANYAKUL, 2017. "Estimating the Threshold Level of Inflation for Thailand," Journal of Economics Bibliography, KSP Journals, vol. 4(2), pages 150-155, June.
    15. Mehmet Canakci, 2021. "Does Inflation Affect Economic Growth? A case of Turkey and U.S," International Journal of Economics and Financial Issues, Econjournals, vol. 11(3), pages 45-54.
    16. Mr. Raphael A Espinoza & Mr. Ananthakrishnan Prasad & Mr. Gene L. Leon, 2010. "Estimating The Inflation–Growth Nexus—A Smooth Transition Model," IMF Working Papers 2010/076, International Monetary Fund.
    17. Ibrahim D. Raheem, 2018. "Inflation rate of 14–16% is fair for the sub-Saharan African dollarization," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 42(4), pages 779-794, October.
    18. Muhammad Khan, 2013. "Inflation and Sectoral Output Growth Variability in Bulgaria," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 55(4), pages 687-704, December.
    19. Md. Sayebur Rahman, 2023. "Exploring the Impact of Inflation on Economic Development in Bangladesh," International Journal of Science and Business, IJSAB International, vol. 19(1), pages 87-96.
    20. Ndoricimpa Arcade, 2017. "Working Paper 249 - Threshold Effects of Inflation on Economic Growth in Africa: Evidence from a Dynamic Panel Threshold Regression," Working Paper Series 2359, African Development Bank.

    More about this item

    Keywords

    inflation; political stability; corruption; broad money growth; GDP growth;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • P44 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:sagope:v:13:y:2023:i:4:p:21582440231217848. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.