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Economic Growth and Inflation Tradeoffs within Global Stagflation: Evidence from the Vietnam Economy

Author

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  • Ly Dai Hung

    (Vietnam Institute of Economics (VIE), Hanoi, Vietnam)

Abstract

The paper analyzes the interaction of economic growth and inflation rate on accounting for both sources of capital investment and global shocks. The analysis method is a time-varying coefficient Bayesian vector autoregression (TVC-BSVAR) model applied in a quarterly data sample of the Vietnam economy over Q2/2001–Q4/2022. The global factors, including the world economic growth and the inflation rate, are the most important drivers of domestic growth and inflation rate. A greater world growth rate raises the domestic growth rate while a higher world inflation rate increases the domestic inflation rate. If the world economy falls into stagflation with declining growth and a rising inflation rate, Vietnam’s economic growth reduces while the inflation surges. The monetary and fiscal policy can be employed to recover domestic economic growth but with an associated surge in the domestic inflation rate.

Suggested Citation

  • Ly Dai Hung, 2024. "Economic Growth and Inflation Tradeoffs within Global Stagflation: Evidence from the Vietnam Economy," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 15(02), pages 1-21, June.
    • Handle: RePEc:wsi:jicepx:v:15:y:2024:i:02:n:s1793993324500054
    DOI: 10.1142/S1793993324500054
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    More about this item

    Keywords

    Global stagflation; vector autoregression; Vietnam economy;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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