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Output-Inflation Trade-Off in the Presence of Foreign Capital: Evidence for Vietnam

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  • Ly Dai Hung

    (Vietnam Institute of Economics, Hanoi, Vietnam)

Abstract

On one monthly time-series dataset of Vietnam economy over 02/2008-09/2018, the Time-Varying-Coefficient VAR model records that the trade-off between inflation and output growth is mitigated by the foreign capital inflows. The inflation is mostly determined by credit supply growth, while output growth is largely driven by foreign direct investment (FDI) capital inflows. A monthly increase of FDI by 1 billion USD can raise 1.77 percent of monthly output growth rate. The result also holds on accounting for exchange rate fluctuation.

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  • Ly Dai Hung, 2019. "Output-Inflation Trade-Off in the Presence of Foreign Capital: Evidence for Vietnam," Working Papers hal-03112746, HAL.
    • Handle: RePEc:hal:wpaper:hal-03112746
    Note: View the original document on HAL open archive server: https://hal.science/hal-03112746
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    References listed on IDEAS

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    9. Timothy Cogley & Thomas J. Sargent, 2002. "Evolving Post-World War II US Inflation Dynamics," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 331-388, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ly Dai Hung, 2021. "External Debts and Economic Growth when Debt Rating Matters," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 12(03), pages 1-26, October.
    2. Ly Dai Hung, 2020. "A Macro-Finance Model of Government Bonds Yields in Vietnam," Working Papers hal-03133807, HAL.
    3. Ly Dai Hung, 2022. "Exchange Rate Risk Premium in Vietnam," Malaysian Journal of Economic Studies, Faculty of Business and Economics, University of Malaya & Malaysian Economic Association, vol. 59(2), pages 301-315, December.
    4. Ly Dai Hung, 2021. "Economic Growth with Public and Foreign Investment in Vietnam," Working Papers hal-03241846, HAL.
    5. Ly Dai Hung, 2022. "Economic Growth and Inflation Tradeoffs within Global Stagflation: Evidence in Vietnam Economy," Working Papers hal-03774248, HAL.
    6. Ly Dai Hung, 2022. "Inflation Structure in Vietnam Economy," Working Papers hal-03863173, HAL.

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    More about this item

    Keywords

    Economic Growth; Inflation; Foreign Capital Inflows; Exchange Rate; Time Varying Coefficients Vector Autoregression (TVC-VAR) model;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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