Inflation Research Articles

Analyzing the impact of exchange rate fluctuations and inflation on the GDP in Iraq using the modern methodology of Cointegration for the period (1988-2020)

The research aims to analyze the impact of exchange rate fluctuations (EXM and EXN) and inflation (INF) on the gross domestic product (GDP) in Iraq for the period 1988-2020. The research is important by analyzing the magnitude of the macroeconomic and especially GDP effects of these variables, as well as the economic effects of exchange rates on economic activity. The results of the standard analysis using the ARDL model showed a long-term equilibrium relationship, according to the Bound Test methodology, from explanatory (independent) variables to the internal (dependent) variable, while the value of the error correction vector factor was negative and moral at a level less than (1%). The relationship between EXM and GDP was inverse, with partial flexibility for EXM (-7.666), meaning that an increase in EXM (1%) will lead to a decrease in GDP (7.666%). This applies to the reality of the Iraqi economy, as the method used in recent times is to devalue the local currency. The effect of EXN was steady in the long run, with the partial flexibility of EXN (5.785), that is, an increase of EXN (1%) will lead to an increase in GDP (5.785%), and the model as a whole is statistically significant. The explanatory power of the model is high, as it was (R2=0.816), indicating that 81% of the changes in GDP in constant prices are due to the change in (EXM, EXN, and INF). The study concluded that in light of the outbreak of the coronavirus, the disruption of most economic projects, and the decline in the prices of the Iraqi government, as a result of the decrease in the balance of oil and oil revenues, as a result of the balance of the government part of the solution is to devalue the local currency by controlling the nominal exchange rate. At present, the Iraqi Monetary Authority recommends that the Managed Flexible Exchange System be continued as an effective means of avoiding external shocks for the Iraqi economy, as it allows for appropriate adjustments to be made continuously

China’s Currency Sterilization and Fiscal Centralization

During the late 1980s and early 1990s, the Chinese economy experienced painful tradeoffs between high economic growth and low inflation: stimulating GDP growth would cause severe inflation spikes, while controlling inflation rates would seriously contract GDP growth. In 1994, the Chinese government initiated a series of macroeconomic reforms to revitalize the Chinese economy. After that, the inflation dropped steadily and eventually achieved the “soft landing” in 1996. The high GDP growth rate has also been stabilized. This research elucidates two core components embedded in China’s 1994 program: currency sterilization and fiscal (revenue) centralization. The results suggest that classic economic models with nominal rigidity postulation may not be compatible with the Chinese economy.

Measuring and analyzing the impact of external loans on some macroeconomic variables in some selected countries (USA, Egypt, Iraq) During the (1980-2020)

External debts are one of the unusual sources that some countries and governments often resort to their financial needs as a result of a number of reasons and factors of economic, financial , social and political. This resort can result from contracting or concluding a number of economic, financial , social and political impacts. This article aims to measure and analyze the impact of external debts on some macroeconomic variables in selected countries (USA, Egypt, and Iraq) for (1980-2020, in addition using the Econometrics method through appling time series and panel data on some macroeconomic variables, including (Economic growth, investment and inflation rate) in the selected countries. At the end the article concludes that there are positive and negative impact of external debts, but in general the external debts has positive impact in economic growth, investment and inflation rate in USA, but this impact is negative in Iraq, while this impact is moderately) positive and negative) in Egypt, and this difference is due to how the external debt process and the amount and type of interest rate as well as how countries direct and use external debts. Therefore, countries and governments should reconsider the issue of external loans in terms of reasons and conditions and the necessity of linking them to strategic investment projects that can service their debts without being a burden on the national economy.

Responses of the Internal and External Economic Conditions to Exchange Rate Regimes in Nigeria: The Comparative Analysis

Exploring the ARDL modeling techniques, this study hypothesized that the internal and external economic conditions respond differently to exchange rate regimes. Covering the period between 1970 and 2020, the study shows that both fixed regime and intermediate regimes have the potential of causing declining inflation (INFL) compared to floating exchange rate regimes. However, when the economic condition is considered from the external perspective measures using trade balance, the magnitude of the impact of both fixed and intermediate regimes appears to be relatively higher for the external economic condition (trade balance) compared to inflation which is a measure for internal economic condition. More importantly, our findings tend to find support in a number of the previous studies.

On Returning Inflation to Target

To gauge the breadth of current inflation and prospects for inflation returning to target, we consider disaggregated measures of CPI infl ation to evaluate trends and then consider diff erent scenarios for the realisation for wages and prices.

The efficiency of primary sovereign bond markets in Turkey: The so-called Fisher puzzle reconsidered

Many prior studies have tested the validity of the Fisher effect , with results proving controversial, regardless of the econometric models , country groups, or time spans chosen. Therefore, to solve the so-called Fisher puzzle, this study aims to reveal whether current interest rates , which are set in the primary bond markets, carry information about actual inflation rates when the conventional direction of causation is reversed, using monthly Turkish data from the 2010–2018 period. In line with our expectations, we found a significant long-run coefficient (0.92), which indicates that changes in interest rates are rational expectations of changes in current inflation rates, though a full Fisher effect was not observed. Moreover, the short-run coefficients were also significant, which highlights the fact that the unanticipated movements in these variables act as early signals of persistent future price-level changes. Therefore, monetary authorities should respond rapidly in the short run using rules-based proactive policies to curb long-run volatilities, which also restrict the power of estimations, as market participants tend to assign higher risk premiums to bond yields when prices are expected to surge.

Has bank credit really impacted agricultural productivity in the Central African Economic and Monetary Community?

PurposeThis paper investigates the impact of bank credit on agricultural productivity in the Central African Economic and Monetary Community (CEMAC) from 1990 to 2019. Studies’ results on the impact of bank credit on agricultural productivity are not conclusive. The studies demonstrate diverse outcomes which are debatable. The results are conflicting.Design/methodology/approachAgricultural value added (AGRVA) to the gross domestic product (GDP) proxies agricultural productivity while domestic credit to the private sector by banks (DCPSB), broad money supply, land, inflation (INF), physical capital (PHKAP) and labour supply are explanatory variables. The autoregressive distributed lag technique is utilized.FindingsThe co-integration test results show a long-run co-integration among the variables. The findings disclose that DCPSB, land and PHKAP impact positively on the AGRVA. Broad money supply, INF and labour impact negatively on the AGRVA to the GDP.Research limitations/implicationsThe results suggest that the CEMAC governments should encourage effective ways to increase bank credit flow to private enterprises in the agricultural sector through efficient bank's intermediation.Practical implicationsThe governments should create more agricultural banks and improve the operation of existing ones to ensure direct credit to agricultural activities. The Bank of Central African Economic and Monetary Community should apply aggressive policy which eliminates all the bottlenecks undermining credit flow to the private sector in mutualism with agricultural productivity.Social implicationsThe commercial banks should give more credit to private sector to mutually benefit the agricultural sector and the banking sector. The governments of the CEMAC economies should expand funding into the capital market which considerably boosts agricultural productivity.Originality/valueStudies’ results on the impact of bank credit on agricultural productivity are not conclusive. The studies demonstrate diverse outcomes which are debatable. The results are conflicting; some reveal positive impacts, some show negative impacts and others indicate U-shape behaviour. Hence, research is required to fill the lacuna.

HEALTH EXPENDITURE, EDUCATION AND ECONOMIC GROWTH IN NIGERIA

Education and health are crucial ends in and of themselves, as well as important development objectives. Both are critical to the broader idea of expanded human strength, which is at the centre of the notion of growth. The research looks at Nigeria's health expenditure, education, and economic growth, spanning from 1981 to 2019. This paper used principal component analysis (PCA) to calculate variables such as the education expenditure index (EEI) and the health expenditure index (HEI), as well as other explanatory factors such as inflation (INF), life expectancy rate (LER), maternal mortality rate (MMR), and GDP growth. The dependent variable is real GDP. The study used an error correction model (ECM) as an estimating approach. According to the empirical data, government disbursement on education and health has a positive and considerable impact on economic growth and interaction. The results further demonstrate the absence of serial autocorrelation. Furthermore, the report suggests that the government enhance current health and education facilities to encourage economic growth. However, because of the availability and improved health and education services in Nigeria, this policy will decline the appalling state and quality of education and health care, resulting in fewer Nigerians fleeing the country searching for better health and education facilities.

Equity Financing, Debt Financing, and Financial Performance in Islamic Banks

This research aims to determine the effect of bank size (SIZE), profitability (ROA), efficiency (EFF), non-performing finance (NPF), interest (INTR), and inflation (INFL) on profit and loss sharing (PLS) financing (equity financing), and sale-purchase (SP) financing (debt financing) Islamic banks in Indonesia. Furthermore, monthly Islamic bank data in June 2014 to July 2020 was used. The autoregressive distributed lag (ARDL) method was used to determine the short and long-term effects of the independent variables on the financing variable. The results showed that ROA and EFF have a positive effect on MRF but ROA and EFF have a negative effect on MDA and MSF. NPF has a positive effect on MDF, but has a negative effect on MRF. Meanwhile, SIZE has a negative effect on MDF, MDA, MRF, and MRA. The INTR has a negative effect on MDA, MRF, and MRA. The implication of this research is that financialperformance has more influence on debt financing compared to equity financing of Islamic banks in Indonesia.

DCNN-GCM: A Deep CNN and Granger Causality Models for Forecasting Welfare Level of Energy-Producing Countries and Evaluating the Relationship between Energy Consumption and Sustainable Economic Welfare

From the beginning of creation, human beings have realized the importance of energy for survival. They have always devoted a significant part of their energy to provide the required energy. Moreover, it can be said that energy resources have an essential role in the life and evolvement of societies. On the contrary, with the depletion of energy resources, severe environmental pollution caused by the consumption of petroleum products, and high cost of energy in the production cycle, allocating these resources must be carried out carefully. This paper aims to look at the connection between energy consumption and sustainable economic welfare in OPEC countries (Iran, Kuwait, Saudi Arabia, UAE, Ecuador, and Venezuela) during 2019–2009, utilizing the panel data method. Finally, we presented a CNN architecture for forecasting welfare levels in the case study countries. As a result, the relationship between energy consumption and economic growth among selected countries from energy-producing countries was compared in this analysis, which used the standard Granger causality test and the Granger causality test in several domains. The findings suggest that economic growth and inflation positively impact energy consumption in the countries studied. In addition, energy consumption positively impacts these countries’ sustainable economic welfare, while inflation has a negative effect. In addition, the findings of the standard Granger causality test indicate a one-way causal association between energy consumption and economic development in Iran and Venezuela, as well as one-way causality from GDP to energy consumption in Ecuador, the United Arab Emirates, Saudi Arabia, and Kuwait. Also, based on the results of the CNN method, the RMSE are 1.75, 3.81, 1.39, 0.52, 0.69, and 1.72 for Ecuador, Emirates, Iran, Saudi Arabia, Kuwait, and Venezuela, respectively.

An Investigation of Economic Growth, Youth Unemployment and Inflation In ASEAN Countries

An Investigation of Economic Growth, Youth Unemployment and Inflation In ASEAN Countries

Analysis of international financial and economic relations of Russia with the benchmark countries

Subject — International financial and economic relations of Russia. The purpose of the work — determine the possibilities of maintaining a significant position of Russia in international financial and economic relations with benchmark countries. The methodology of work. The study is based on a systematic approach using the method of statistical, neural network and cluster analysis. The results of the work. The results of the analysis of the international financial and economic relations of Russia with the benchmark countries reflect the importance of the indicators: "GDP, in current prices (US dollars and at PPP, US dollars)", "Total government expenditures (% of GDP)" and "The volume of imports of goods (change in%)". For the preservation and monitoring of international financial and economic relations between Russia and the benchmark countries, common indicators are: "General government revenues (national currency)" — India; «GDP, in current prices (US dollars)» — China. To maintain these ties, Russia needs to adjust its relations with benchmark countries according to the indicators "Population" and "Inflation, consumer prices at the end of the period (index)". The Bank of Russia’s desire to target inflation, fixes the indicators "Population" and "Infl ation, consumer prices at the end of the period (index)" Government net lending, borrowing (% of GDP, local currency), and growth rate of domestic government debt. The scope of the results. The provisions of the study expand the scope of knowledge and develop the competencies of members of the government of the Russian Federation to assess opportunities for economic growth and choose a way of development. Conclusions. The possibilities of maintaining a significant position of Russia in international financial and economic relations with benchmark countries are linked with India in terms of total government revenues in national currency and China in terms of GDP in current prices in US dollars. The Bank of Russia is able to maintain this position and maintain target inflation.

Business organisation performance behaviour indicators in Ghana and Kenya: A comparative analysis

We examined business organisation performance indicators across two African countries (Ghana and Kenya) with diverse and volatile economic variables. Utilising secondary data from 2007 to 2017, we applied fixed-effect panel regression to predict profitability indicators from business operations. Our findings indicated that operating cost per sales and assets had a negative relationship with profitability; while liquidity and sales had a positive relationship with profitability as measured by return on assets and profit margins in both countries. In Ghana, economic behavioural indicators, inflation, and exchange rate had a negative effect on return on assets; whereas currency in circulation, trade openness, and country competitiveness had a positive relationship with return on assets. In Kenya, the exchange rate had a negative non-significant relationship with profit margin, while currency in circulation was significantly and positively correlated with profit margin. Firm-specific variables (operating cost, assets, and sales) and macro-economic variables (inflation, exchange rate, currency in circulation, trade openness, and country competitiveness) appear to have an influence on the market behaviours of business organisations in two African countries.

Helicopter Money and Basic Income, or a Work-Based Society? : A Brief History of Wages, Benefits, Loans and Quantitative Easing

Following the coronavirus outbreak, and especially before infl ation became a key factor in this period, several crisis management proposals raised the possibility of a universal basic income, which could be backed by the central bank’s money creation. Th e following paper is an essay that seeks to grasp the political economic meaning and implications of the propositions related to helicopter money and basic income. We cannot avoid observing the essence of these proposals, presented fundamentally as a distribution-related issue, in the historical context of value, work and money creation. Helicopter money appears in this light as a new paradigm of extensive growth, which at fi rst glance comes off as a fi nancial innovation, but paradoxically rather bears a relationship with a pre-capitalist conception of value. Moreover, helicopter money is a wage-substitute transfer that does not respond to the social and symbolic void that has replaced work. It appears to be a welfare instrument, while it can only rest on the separation of production and consumption on a global scale. Helicopter money is an extension of quantitative easing by other means, which unveils the motives for money creation. It is an overture to the thought experiments of ‘value without work’ and ‘economy without people’.

A Review on the Impact of Duterte's Administration on the Economy's Inflation

A Review on the Impact of Duterte's Administration on the Economy's Inflation

The asymmetric effects of the current account balance on inflation

Purpose: We aim to highlight the asymmetric relationship between the current account balance and inflation via the nonlinear boundary test approach for the period 2002:01-2020:10. We analyze the Turkish economy because Turkey has started implementing a new economic policy, which mainly aims to control inflation by maintaining a current account surplus. As a result, the primary purpose of this research is to determine the influence of the current account balance on local inflation, as well as to assist in the formulation of appropriate economic policies to minimize any negative effects on the local economy. Methodology: The nonlinear boundary test approach (NARDL) is used for the 2002:01-2021:10 data period due to the possibility of long-term nonlinear relations between the inflation rate and the current account balance. Results: According to the analysis findings, there is a long-term cointegration relationship between variables. It is deduced that while there exists long-term asymmetry between the current account balance and inflation, the coefficients themselves are not statistically significant, and magnitudes are negligible. However, the effect of dollarization and the lagged values of the CPI on current inflation are statistically significant and substantial, which underpins the importance of inflation inertia, inflation expectations, and the pass-through effect. Conclusion: With a view to stabilizing inflation, policymakers should prevent dollarization by taking the necessary measures.

МОДЕЛІ АНАЛІЗУ ІНФЛЯЦІЙНИХ ОЧІКУВАНЬ

Households, firms, and financial market participants adjust their behavior according to their own expectations about future price increases. Inflation expectations often lead to higher actual prices. Accordingly, inflation expectations are characterized by self-fulfilling and they are one of the factors influencing the future level of inflation. It is important for central banks to monitor inflation expectations and shape them in the desired way through their activities and communications through the monetary transmission expectations channel. Therefore, empirical conclusions about the inflation expectations of agents are significant and relevant for monetary policy. This paper presents the results of the analysis of existing types of models for the analysis of inflation expectations with the subsequent implementation of individual models on the data of inflation expectations, which are monitored by the NBU. Particular attention is paid to the analysis of models of inflation anchoring, models of assessment of rationality and shift of inflation expectations, as well as models of forecasting inflation expectations. The use of applied econometric tools allowed to obtain competitive science-based results. In particular, the calculations showed that the highest sensitivity to inflation among all groups of respondents is shown by households, and the least sensitive according to the results of the model are inflation expectations of financial analysts. The developed forecast models have acceptable forecasting properties and can be used to forecast inflation expectations. The analysis showed that the degree of anchoring of inflation expectations at the level of the Central Bank's inflation target determines the effectiveness of monetary transmission through the expectations channel, and reflects the level of confidence of economic agents in monetary policy. In the absence of trust in the Central Bank, inflation expectations can be adaptive, i.e. those that are formed under the influence of past inflation. Under such conditions, the effectiveness of the transmission mechanism of monetary policy weakens, and current inflation, due to deteriorating expectations, becomes more sensitive to the effects of various shocks. On the basis of the analyzed literature the main directions of research of inflation expectations, and also the basic approaches to construction of models of the analysis of inflation expectations are presented.

Assessing Exchange Rate Volatility and Economic Growth in Nigeria: A Garch Model Approach

This study has examined the impact of exchange rate volatility on economic growth in Nigeria from the year 1981 to the year 2020. The study adopted secondary data (i.e. time series) obtained from World Bank National Account data and Central Bank of Nigeria Annual Statistical Bulletins, subjecting them to statistical analysis for relevant inferences to be made. Five variables were used in the study which were Growth rate of Gross Domestic Product (GRGDP), Exchange Rate Volatility (EXRV), Balance of Trade (BOT), Oil Price (OILP) and Inflation (INF) Rate. The variables were subjected to unit root test and they were stationary at different order of I(0) and I(1). Since the Variables were not all stationary at level but a mixed series, the ARDL bound test of cointegration was used to test for cointegration among them. Using the bound test, the variables were found to be cointegrated at 1% level of significance. The ARDL result indicated that; Exchange rate volatility has a significant impact on economic growth, with the impact being negative. In addition, other economic variables such as inflation has a negative and significant impact on economic growth while oil price have a positive and significant impact on economic growth. On the other hand, BOT has a positive effect on growth but the impact was significant at the 10 percent level. From the findings the study recommended that foreign exchange market should be well monitored with a view to ensuring that only ventures that would engender value added production in the real sector and export-oriented businesses should have more access. This will help to increase the value of the naira against major world currencies.

An Assessment of the Impact of Monetary Policy on Economic Growth in Nigeria: Toda-Yamamoto Approach

This study interrogated the impact of monetary policy on economic growth in Nigeria using annual time series data from 1981 to 2020. The paper used the growth rate of gross domestic product (GRGDP) as the endogenous variable, while, broad money supply (MS2), monetary policy rate (MPR), Inflation (INFL), liquidity ratio (LDQR) and exchange rate (EXCH) were the exogenous variables and proxies for monetary policy. Data were obtained from the Central Bank of Nigeria’s Statistical Bulletin of various years and World Bank National Account Data. The study used descriptive statistics, performed a unit root test using Augmented Dickey-Fuller, Autoregressive Distributed Lag (ARDL) Bound test, and to test for causality, Toda Yamamoto was deployed. Finally, the Toda Yamamoto Causality test revealed that all the exogenous variables had bi-directional causality with economic growth except for the exchange rate that had uni-directional causality with economic growth. In the light of the findings, the study recommends that Broad Money Supply (MS2) should be adequately managed and manipulated to achieve the needy growth, in line with pursued monetary policy stance of the monetary authority. Also, the monetary authority and the government should vigorously pursue policies that would increase financial inclusion in Nigeria as it would enhance the effectiveness of the monetary policy.

Factors affecting stock price: Evidence from commercial banks in the developing market

This study aims to investigate the impact of microeconomic and macroeconomic factors on the market price per share using panel data from 13 listed Jordanian commercial banks during the period 2010–2021. Based on a microeconomic level the firm-specific variables are earnings per share (EPS), dividend per share (DPS), price-earnings ratio (PE), book value per share (BV), return on assets (ROA), and size (S). Similarly, gross domestic product (GDP), inflation (INF), and money supply (MS) were chosen as independent variables for the macroeconomics whereas the company’s dependent variable is market price per share (MPS). Earnings per share are the most internal and external factors affecting the share price (Arshad, Arshaad, Yousaf, & Jamil, 2015). This paper has investigated the influence of bank-specific and macroeconomic factors on the share price of Jordanian commercial banks using multiple regression models. Based on the regression results, the coefficient of EPS is positive at the 1% level of significance. implying that the greater the EPS, the higher the MPS. The same positive impacts for DPS, ROA, and S are considered major predictors of stock prices in Jordan. Volume was discovered to be the most important determining variable impacting stock price among the factors. This indicates that the bigger the company’s market capitalization, the higher the stock price. Major variables that impact the stock price include macroeconomic data such as GDP and MS.