Sources of Inflation in Developing Countries

Author/Editor:

Prakash Loungani ; Phillip L Swagel

Publication Date:

December 1, 2001

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper develops stylized facts about the inflation process in developing countries, focusing particularly on the relationship between the exchange rate regime and the sources of inflation. Using annual data from 1964 to 1998 for 53 developing countries, we find that money growth and exchange rate changes-factors typically related to fiscal influences-are far more important in countries with floating exchange rate regimes than in those with fixed exchange rates. Instead, inertial factors dominate the inflation process in developing countries with fixed exchange rate regimes.

Series:

Working Paper No. 01/198

Subject:

English

Publication Date:

December 1, 2001

ISBN/ISSN:

9781451860061/1018-5941

Stock No:

WPIEA1982001

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

29

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