Increase In Inflation Rate Research Articles

Inflation Threshold and Financial Sector Development in Uganda

Purpose: This paper empirically analyzes the inflation threshold for better financial sector development (FSD) in Uganda using the yearly trend data spanning over the period 1980 to 2020. The basic idea of the study was to affirm whether the 5-percent bank of Uganda (BOU) inflations rates target is correct. Design/methodology/approach: The analysis incorporates the Autoregressive Distributing Lags (ARDL) model. This is due to the fact that the variables of the study were not all stationary at the same levels but archived strong stationarity after differencing once. To capture the inflation threshold estimation, the Ordinary Least Square model was run with lag value of the dependence variable. Findings: The research indicates that the critical inflation threshold is 6 percent. Below 6 percent inflation, there is a positive and decreasing impact but a statistically insignificant connection between inflation and FSD. Beyond 6 percent, the relationship becomes negative and the intensity increases exponentially as the inflation rate increases. Specifically, the study estimates that at a 5% inflation rate, the FSD has the potential to grow by about 1.3 % and should the inflation rate increase from the optimal of 6% to 7%, it drops by the same magnitude. Research limitations/implications: Data Limitation. The time span of 1980-2020, is because of no data for some variables beyond the chosen time frame. Even if some data were available, some are inconsistence and varies within the available data base set. Originality/value: The study augment to the development of FSD in Uganda by furnishing the Monetary Authority with evidence that help fix the optimal inflation threshold in the country. Similarly, this research will contribute to the existing body of knowledge on how best to manage the inflation rate in the country.

Effect of Inflation Rate on the Agricultural and Manufacturing Sector in Nigeria (1990-2021)

This work examines the effect of inflation rate on the performance of manufacturing and agricultural sectors. Yearly data were used from 1975 to 2020. The Auto Regressive Distributed Lag (ARDL) was used to analyse the data, and the yearly data were sourced from Word Development indicator (WDI) and Central Bank of Nigerian (CBN) Statistical Bulletin. This research work considers inflation rate, credit to private sector (PRIVATECREDIT), manufacturing capacity utilization (MCAPUTIL), foreign direct investment (FDI), credit to agriculture (AGRICCREDIT), agriculture equipment (AGRICEQUIP)and Exchange rate (EXCH) as independent variables on agricultural output and MVA. Based on ARDL approach, based on ARDL approach, test was carried out on each dependent variable and the independent variable to check the long and short run regression findings for the coefficient of the lagged values of the dependent and independent variables. Some diagnostic test like the serial correlation test, heteroskedasticity test, and stability test were also carried out on the variables. From the results obtained, agricultural equipment, and exchange rate are statistically significance to agricultural output. Foreign direct investment, and inflation rate has statistical significance on manufacturing output. It is therefore recommended that Government should always check on the increase of inflation rate and how it is affecting the performance of the manufacturing sector and agricultural sectors so as to provide necessary solution in case if any problem arises. There should be an encouragement of foreign investment into the manufacturing sector in the country

An Empirical Analysis of Public Debt Sustainability in Kenya

The study provides a focused analysis of Kenya’s determinants of debt sustainability owing to its consistent budget deficits and higher debt servicing costs. Unlike broader studies, this research focuses on Kenya's unique economic conditions and talks about the consequences of unchecked debt servicing payment failures in Kenya that could undo macroeconomic progress if unchecked. The study deploys a single equitation regression analysis followed by a series of robustness checks and a generalized method of moments (GMM) technique to analyze the link for Kenya, 1990-2023. The regression results show that debt in Kenya is not sustainable, with factors such as an increase in debt stock, high-interest rate costs, increase in budget deficits, inflation rate increase and high depreciation of the local currencies ultimately wiping out the repayment potential of Kenya. However, the results show that increased export revenue earnings and faster economic growth can improve budget resources for debt servicing. Our findings suggest that policymakers in Kenya should focus on fiscal consolidation by reducing non-interest expenditures and enhancing revenue collections.

Questioning profit inflation as an explanation of the post-pandemic inflation

The COVID-19 pandemic eventually gave rise to large increases in profits, profit shares and inflation rates. A major controversy has developed among economists and in the media about whether this was largely caused by profit inflation, that is, by increases in the percentage mark-ups set by firms. The paper attempts to clear some confusions regarding the issue of profit inflation, dealing with its definitions and the complexities of its measures. In particular, it shows that increases in economic activity and increases in the relative cost of domestic or imported inputs will lead to an increase in realized profit margins even if percentage mark-ups remain constant. The paper also lists a series of factors that may mitigate the results of empirical studies that show an increase in the aggregate value of this percentage mark-up.

Evaluating the Impact of the COVID-19 Pandemic on the Sustainability of International Trade in Agricultural Products in the Context of Crisis Management: An Assessment of the Agricultural Product Exporting Sectors in Antalya, Türkiye

This study aims to evaluate the impact of the COVID-19 pandemic on the sustainability of international trade in agricultural products through semi-structured, in-depth interviews, focusing on businesses engaged in agricultural product exports in Antalya within the context of crisis management. While Türkiye ranks tenth in the world and first in Europe in terms of agricultural output, Antalya, one of Türkiye’s most economically significant cities, is among the top contributors to Türkiye’s economy in terms of foreign exchange earnings from agricultural product exports. According to the findings of the study, the COVID-19 pandemic has increased the importance placed on the sustainability of agricultural product export activities. Türkiye’s prioritization of agricultural production and export has allowed the agricultural sector to positively differentiate itself from other sectors during the COVID-19 pandemic, turning the crisis into an opportunity. On the other hand, disruptions in global supply chains and increases in logistics and transportation costs due to the pandemic have led to various challenges to the sustainability of sector activities. Moreover, the economic impacts of the COVID-19 pandemic, such as increases in global and national inflation rates and particularly rising fuel and product prices, have resulted in sustainability problems in the agricultural product export sector’s activities today. To ensure the sustainability of activities in the post-pandemic period, effective crisis management strategies and planning are needed. However, according to the study’s results, the issue of crisis management in the agricultural product export sector has not received sufficient attention. To raise awareness about crisis management and ensure productivity, competitive advantage, and sustainability, increasing government support, establishing sectoral cooperation for joint action, and fostering collaboration between the private sector, public sector, and universities could be beneficial.

Does The Military Expenditure Hurt The Economic Growth? Evidence Derive From South Asian Countries

Research Aims: This study examines the impact of military spending onthe economic growth in South Asian countries.Design/methodology/approach: It uses the 134 unbalanced data points ofsix South Asian countries collected from the various reports of the WorldBank. Descriptive and exploratory research designs are used. It is basedon the positivist research philosophy. Some statistical and econometrictools like descriptive statistics, panel unit root test, Johnsen and Kaoresidual cointegration test, and panel ARDL model are used to explorethe impact of military expenditure, inflation rate, unemployment rate,and gross capital formation on the economic growth of South Asiancountries.Research Findings: Inflation has a positive effect on economic growth inthe long run but a negative impact in the short run. Military expenditurehas a positive effect in the long run but a negative impact on economicgrowth; the unemployment rate is negative, and gross capital formationpositively impacts economic growth in the long and short run in SouthAsian Countries. Military spending does not significantly affect economicprogress in the long run, but military expenditure hurts economic growthin the short run. One unit increase in military spending results from a0.633 percent decrease in the GDP growth of South Asian countries. Theyouth unemployment rate negatively impacts economic growth in theshort and long run. One unit increase in the unemployment rate resultsfrom 0.093 and 0.319 unit decrease in economic growth in the long andshort run, respectively. Likewise, one unit increase in capital formationand inflation rate results from 0.203 and 0.116 unit increase in GDPgrowth in the long run, respectively. The inflation rate negatively impactseconomic growth in the short run. One unit increase in inflation rateresults from 0.191 unit decrease in GDP growth in short-run. Prioritizestrategies that mitigate short-term negative impacts of inflation andmilitary expenditure while fostering long-term economic growth throughinvestment in capital formation and addressing youth unemployment inSouth Asian countries.Keywords: Inflation, unemployment, panel data, Keynesian stimulushypothesis, stagnation

Post-Pandemic Rental Housing Affordability Economics in the U.S., U.K., & Canada

<p class="MsoNormal" style="text-align: justify;"><span style="font-family: 'times new roman', times, serif; font-size: 14pt;">Rental unaffordability is defined as spending more than 30% of a household’s gross income on rent. Post-pandemic inflation and interest rate increases have intensified rental unaffordability. This research examines rental affordability in the U.S., the U.K., and Canada. It also explores the effect of renters’ “affordability knowledge” – defined as the expertise tenants have and use to make economical rental housing choices – on rent expenditure and affordability positioning and compares personal finances, economic perspectives, and demographics based on renters in affordable and unaffordable situations. The results show that nearly two-thirds of the renters studied are in unaffordable rental situations. Interestingly, affordability knowledge was found to reduce rent spent and increase affordability situations. Significant demographic differences were found between those in affordable and unaffordable rental situations, including rent spending, food spending, transportation spending, savings, perceived homeownership likelihood, and age. The research offers important insight into current rental affordability economics, recommendations for policymakers, and opportunities for real estate organizations.</span></p>

Asymmetric effects of oil prices on inflation in Côte d’Ivoire

This study examines the asymmetric effects of both international and local oil prices on the inflation rate in Côte d’Ivoire over the period 2005–2022. A nonlinear autoregressive distributed lag (NARDL) model is used to account for the asymmetric effects and analyse both long run and short run effects of oil prices on inflation. The results indicate that in the long run, an increase in international and local oil prices results in an increase in inflation rate, with higher effect for local oil prices. In addition, long run effects of a negative oil price variation on inflation have a greater magnitude than that of a positive one. The effects on inflation of Brent and diesel are statistically symmetrical. It is also found that the inflationary effects of diesel prices are greater than those of other petroleum products. Policy recommendations are provided based on the empirical results of the paper.

Inflation and Macroeconomic Performance in Nigeria

In Nigeria, high inflation has been one of the major challenges facing the nation’s economy. This has necessitated the re-evaluation of the impact of inflation on the nation’s macroeconomic performance between 1981 and 2022. The data utilized were sourced from the secondary sources like Central Bank of Nigeria Statistical Bulletin 2022 and United Nations Conference on Trade and Development Report. The inflation rate, exchange rate, and interest rate served as independent variables, while per capita income and gross fixed capital formation (proxy for private investment) served as the dependent variables. The outcome of the unit root tests showed that all the variables were not stationarity at level, but became stationary after first difference which informed the use of Error Correction Model (ECM) test approach. The results from the per capita income model, revealed that an increase in inflation rate, exchange rate and interest rate erodes the value of the per capita income of the citizens. The result from the private investment model, showed that an increase in inflation rate, exchange rate, and interest rate reduces the level of private domestic investment. The policy implication of these results is that negative impact of inflation on these key macroeconomic indicators suggests that high or volatile inflation rates can hinder economic growth and development. The paper therefore recommends amongst others, that the central bank should adopt appropriate monetary policies aimed at controlling inflation rates within acceptable levels. This may involve adjusting interest rates, managing money supply, and employing other monetary tools to stabilize prices. Furthermore, government should prioritize fiscal discipline and prudent spending to avoid excessive budget deficits that can fuel inflationary pressures and allocate funds towards productive investments and infrastructure projects that stimulates economic growth without exacerbating inflation.

The Determinants of Unemployment Rate in Tanzania: An Investigation

This study was conducted to analyze the determinants of the unemployment rate in Tanzania from 1992 to 2021. The unemployment rate was the dependent variable with other explanatory variables such as Gross Domestic Product, Inflation rate, wage rate, Education, and population growth. The study employed the Ordinary Least Square (OLS) method to estimate the model after using the Augmented Dickey fuller test for unit root. The results show that GDP is statistically significant at a 5% percent level means that it is an important factor in the determining unemployment rate in Tanzania. Similarly, the inflation rate is positive and statistically significant at 5% percent, it is an important factor in the determining unemployment rate in Tanzania because an increase in the inflation rate increases the unemployment rate in Tanzania. Population growth and education are statistically significant at 5% percent meaning that are also an important factor in the determination of unemployment in Tanzania. Also, the coefficients of inflation and education were statistically significant meaning that an increase in education level and population growth leads to more unemployment rate in the country. This study suggests policymakers in the country to create more awareness of the impact of increasing population growth and education level to result in unemployment rates.

Enflasyon Büyümenin Tetikleyicisi Mi Yoksa Ekonomik Yavaşlığın Habercisi Mi? Türkiye’nin 26 Alt-Bölgesi Üzerine Dinamik Eşik Modeli Analizi

This study aims to explain the effects of regional inflation thresholds on regional economic growth in 26 sub-regions (NUTS-2 level) in the Turkish economy by using dynamic threshold model analysis for the period 2004-2020. The findings of the analysis show that increases in regional inflation rates affect regional growth positively until reaching the threshold value, but negatively after exceeding the threshold value in 20 of 26 sub-regions. This result is in parallel with the findings frequently questioned in the literature in recent years and points out the phenomenon that is composed of the synthesis of the monetarist and the structural views. Besides, analysis findings showing that steady-state income convergence process is valid in 25 sub-regions reflect that increases in regional population ratios have statistically insignificant effects on regional economic growth. In addition, it has been observed that employment increases accelerate the growth processes of relatively developed regions, while statistically insignificant effects have been detected in underdeveloped regions. A similar result shows itself in terms of foreign trade data, and it is seen that the effect of foreign trade on regional growth is quite limited. When the results are evaluated as a whole, it can be mentioned that the distinction between developed and underdeveloped regions in the Turkish economy is sharp and that macroeconomic indicators affect the economic growth of the regions according to their development level.

The Effect Of Inflation On Currency Substitution (Dollarization) An Analysis: On Türkiye NUTS2 Regions

Dollarization is one of the phenomena that money markets of developing economies frequently experience in the twentieth century. Many studies associate dollarization with inflation through the depreciation of the national currency and compare the results by country and/or region. The aim of this study is to determine the long-term and short-term effects of the inflation rate on dollarization in Turkiye within the scope of regions. In addition to the use of heterogeneous panel data methods in the process of analyzing the subject, obtaining inferences from a regional perspective can be noted as the most important difference from other studies. In the study, quarterly data belonging to 26 statistical regions were used for the period 2007:4-2021:4. According to the DCCE results, the inflation rate in the long term positively affects dollarization in three regions (TRC2, TR42 and TR81). In addition, according to the MG forecast results covering the entire panel, a 10%-point increase in the inflation rate increases dollarization by 2% points in the long term. In order to determine the short-term relationship, Emirmahmutoğlu and Köse (2011) panel causality test was applied. According to the results of the causality test, when the entire panel is taken into account, the inflation rate is not the reason for dollarization. However, heterogeneous results show that the inflation rate is the reason for dollarization in 13 of the 26 regions.

Keynesyen Tasarruf Fonksiyonu ve Türkiye Ekonomisi Analizi: 1985-2021

The aim of this study is to test the Keynesian savings function for the Turkish economy. To achieve this goal, the fundamental savings function proposed by Keynes was utilized, and data from the years 1985 to 2021 were used for the Turkish economy. The determinants of savings in the model include GDP per capita, income tax rates, deposit interest rates, and inflation rate. The selected variables in the model are in line with the literature. Empirical analysis determined that the most suitable method is the Autoregressive Distributed Lag (ARDL) approach. Based on the conducted empirical analysis, an increase in GDP per capita and deposit interest rates leads to an increase in the amount of savings. On the other hand, an increase in tax rates and inflation rate reduces the amount of savings. According to the findings obtained from the study, the Keynesian savings function is applicable to the Turkish economy for the years 1985 to 2021.

How Sweden Deals During Global Economic Crisis?

European countries are currently experiencing economic shocks. Uncontrollable economic downturn and continuously increase of inflation rate. Sweden as one of the European countries did not feel the impact of the recession significantly. Sweden managed to control its economy because it learned from the previous crisis. Some programs are designed to anticipate bad possibilities that will occur as a result of a crisis. Many studies say that Sweden is a European country that has a good crisis. This study aims to analyze how Sweden is dealing with the ongoing crisis due to the Covid-19 pandemic and Russia's Ukraine war and the series of conflicts that are currently happening in the world which have an impact on the world economy. This research was conducted using qualitative methods that use some data from various credible sources and produce conclusions with appropriate facts. The results of this study found that Sweden has succeeded in suppressing the crisis in its country and maintaining the welfare of its people, although it has not been completely free from the effects of the recession and all the possibilities that will occur in the future.

Does Twin Deficit Hypothesis Exist in India? A Structural Break Co-integration Analysis

The primary focus of this study is to examine the long-term and short-term impact of fiscal deficit (FD) on the current account deficit (CAD) in India over the period of 1980 to 2021 in the presence of inflation and exchange rate. For the estimation of data series, the study employed autoregressive distributed lag (ARDL) co-integration test and Gregory Hansen (GH) co-integration test with endogenous structural break. The empirical results from ARDL bounds tests fail to provide a long-run relationship for the variables. The threshold co-integration test (GH) estimation suggests a strong evidence of a co-integration relationship for the variables and the break year is found in 2005. Thus, the findings validate the twin deficit hypothesis in the long-run as the FD has a positive significant effect on a CAD in India. Similarly, the long-run estimates of inflation have a positive significant effect on the CAD. It implies that an increase in rate of inflation distorts the CAD in the long-run. Consequently, the government of India should control the price hike and make macroeconomic situations favourable for domestic tradable sectors. The results from the Granger causality technique show bidirectional causality between FD and CAD implies the twin deficit in India. Based on the empirical findings, it may be argued that the Central Bank of India should try to reduce the prolonged CADs and retain stability in the domestic currency.

Soaring inflation in sub-Saharan Africa: A fiscal root?

The study investigates the effect of fiscal policy on the inflation rate in a panel of 44 sub-Saharan African (SSA) countries over the period 2003-2020 using a non-linear system generalized method of moments (system GMM) and the dynamic panel threshold estimation techniques. The results show that the recent increase in inflation rate has a fiscal nature and that monetary policy alone may not provide an effective response. Specifically, the results indicate that a positive shock to fiscal policy (captured by public debts) has a positive and statistically significant effect on inflation, while a negative shock to public debt has a statistically non-significant impact on the inflation rate. Also, money supply exerted a positive and insignificant impact on inflation, indicating that the current inflation rate in the region may not be induced by money supply. However, the joint effect of public debts and money supply shows that public debts aid the effect of money supply on the inflation rate, albeit, not in the proportion predicted by the quantity theory of money. Further, the results also found a public debt threshold point of 60.59% of GDP. This implies the current inflationary pressure may be rooted in fiscal policy and that further accumulation of public debts beyond the benchmark established in the study would worsen the inflationary pressure in SSA. Importantly, the study found that for fiscal policy to spur growth and reduce inflationary pressure in SSA, the inflation rate should be managed and brought within a single-digit framework of 4%. The research and policy implications are discussed.

Changes in the Price Policy of the Trading Company as a Result of the Global Economic Crisis After Covid-19 and the War in Ukraine

In the conditions of changes in the economic situation, which led to inflation, trade companies are put to the test of transforming their pricing strategy and at the same time remaining competitive on the goods market. Rising resource prices lead to significant increases in inflation rates internationally. Those who offer goods to their consumers must take a position for a longer-term and sustainable change in their pricing strategy, so that they generate a profit with which they manage to cover the costs of producing or selling their products. In addition to changes in profit management, it will be necessary to include marketing methods to promote products and inform customers about their qualities. Increasing the market share of the companies will not be the only goal if they desire the long-term of their business, but they will have to create strategies to increase their revenue without it being dependent on the volume of sales.

Determinante bankarskog kreditiranja malih i srednjih preduzeća u EU

This study examines factors that influence bank lending to SMEs in the EU. We employ relevant firm-, industry-, and macro-level variables to confirm the significance of bank lending process determinants through multiple panel data models. We find that increase in GDP p.c., number of bank branches, banking market concentration, support measures, repayment in event of bankruptcy and shorter resolving time positively impact SMEs access to loans. SMEs with higher turnover and working in construction or manufacturing sectors have a better chance to obtain bank loans, while access to bank financing is negatively affected by increase in inflation rate and operations in service sector.

Testing the Factors that Determine the Profitability of Banks with a Dynamic Approach: Evidence from Turkey

Abstract The present study aims to identify the internal and external factors that affect the profitability of banks operating in Turkey. For this purpose, the study used data from 23 public, private, and foreign banks, covering the period from 2007 to 2020. Two dependent variables were used as the profitability indicators of banks, namely, the Return on Equity (ROE) and the Return on Assets (ROA). In order to increase the reliability of the models developed during the study, Dynamic Generalized Method of Moments (GMM) and Fixed Effect Model (FEM) were applied. Results of the analysis indicate a positive and statistically significant relation between inflation rate and GDP growth rate, and ROA and ROE. According to the results of GMM, there was a positive relation between ROA and ROE, and 1-year and 2-year lagged ROA and ROE. This situation may be explained by the fact that profits acquired in the Turkish banking sector are steady. ROA and ROE were observed to have a positive relation with inflation rate and economic growth rate. In other words, the increase in inflation rate and GDP growth rate positively affect profitability of public, private, and foreign banks.

Corruption and FDI Inflows in Indonesia

The inflows of Foreign Direct Investment (FDI) to a country depend on many factorszzne of the crucial factors is the corruption index, which represents a pivotal aspect in Global Investment Competitiveness (GIC). This research analyzes the impact of the corruption perception index on FDI inflows to Indonesia. Other variables affecting FDI are Gross Domestic Product (GDP), inflation rate, and population. Vector Error Correction Model (VECM) is used to estimate the time series sample between 1995 and 2019. Following the time series procedure, several tests are conducted on the dataset before applying VECM: unit-root, optimum lag, and cointegration. The main finding shows that the higher the corruption index, the higher the FDI Inflows, implicating that low corruption attracts more FDI inflows to Indonesia. Other findings are that an increase in GDP attracts more FDI, an increase in inflation rate reduces FDI inflows, and an increase in population increases FDI inflows. The policy implication of the findings is related to an effort in attracting more FDI inflows requires a substantial endeavor in combating corruption and increasing the Corruption Perception Index of Indonesia from time to time.