Please use this identifier to cite or link to this item: http://hdl.handle.net/1822/2277

TitleDoes political instability lead to higher and more volatile inflation? A panel data analysis
Author(s)Veiga, Francisco José
Aisen, Ari
KeywordsInflation
Volatility
Political instability
Institutions
Issue dateOct-2003
CitationANNUAL MEETING LACEA, 8, Puebla, Mexico, 2003.
Abstract(s)Economists generally accept the proposition that high and volatile inflation rates generate inefficiencies that reduce society’s welfare. Furthermore, studies have shown that inflation is harmful to economic growth. However, determining the causes of the worldwide diversity of inflationary experiences is an important challenge not yet satisfactorily confronted by the profession. Based on a broad dataset covering over 100 countries for the period 1975-1997 and using dynamic and static panel data econometric techniques, this paper shows that a higher degree of political instability is associated with both higher inflation levels and volatility. Not only does this paper advance the political economy literature establishing a relationship between inflation moments and political instability, but it also has important policy implications regarding the optimal design of inflation stabilization programs and of the institutions favorable to price stability.
TypeConference paper
URIhttp://hdl.handle.net/1822/2277
Peer-Reviewedyes
AccessOpen access
Appears in Collections:NIPE - Comunicações a Conferências

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