The Impact of an Inflation Targeting Framework on Food Price Inflation: Evidence from Developing Economies

2016 ◽  
Author(s):  
Abhijit M Surya
Keyword(s):  
Inflation Targeting ◽  
Developing Economies ◽  
Food Price ◽  
Price Inflation ◽  
The Impact

scholarly journals The impact of inflation targeting framework on food price inflation: evidence from developing economies

2017 ◽  
Vol 6 (4) ◽  
pp. 53-60 ◽  
Author(s):  
Abhijit Surya
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Developing Economies ◽  
Policy Instruments ◽  
Food Prices ◽  
Policy Framework ◽  
Price Inflation ◽  
Inflation Rates ◽  
The Impact ◽  
Monetary Policy Framework

Inflation Targeting (IT) has gained much popularity in recent years, with fifteen countries formally adopting it as a monetary policy framework since 2000. However, in developing countries, where the contribution of food prices to headline inflation is generally higher than in advanced economies, the adequacy of an IT framework for curbing inflation is very much contested. In this paper, we use a difference-in-differences approach to evaluate the treatment effect of adopting IT. Controlling for reversion to the mean, we find that economies that function under an IT regime do no better than countries that use alternative policy instruments. We verify the robustness of these results using panel unit-root tests and find that food inflation rates converge across economies irrespective of the monetary policy framework implemented.

scholarly journals The Effects of Rising Food and Fuel Costs on Poverty in Pakistan

2008 ◽  
Vol 13 (Special Edition) ◽  
pp. 117-138 ◽  
Author(s):  
Theresa Thompson Chaudhry ◽  
Azam Amjad Chaudhry
Keyword(s):  
Food Prices ◽  
Food Price ◽  
Energy Price ◽  
Price Shocks ◽  
Price Inflation ◽  
Fuel Prices ◽  
Price Increases ◽  
Head Count ◽  
The Impact ◽  
Poverty Levels

The dramatic increase in international food and fuel prices in recent times is a crucial issue for developing countries and the most vulnerable to these price shocks are the poorest segments of society. In countries like Pakistan, the discussion has focused on the impact of substantially higher food and fuel prices on poverty. This paper used PSLM and MICS household level data to analyze the impact of higher food and energy prices on the poverty head count and the poverty gap ratio in Pakistan. Simulated food and energy price shocks present some important results: First, the impact of food price increases on Pakistani poverty levels is substantially greater than the impact of energy price increases. Second, the impact of food price inflation on Pakistani poverty levels is significantly higher for rural populations as compared to urban populations. Finally, food price inflation can lead to significant increases in Pakistani poverty levels: For Pakistan as a whole, a 20% increase in food prices would lead to an 8% increase in the poverty head count.

Political economy of central-bank mandates in developing countries

2021 ◽  
pp. 1-20
Author(s):  
Zhandos Ybrayev
Keyword(s):  
Monetary Policy ◽  
Unemployment Rate ◽  
Inflation Targeting ◽  
Developing Economies ◽  
Emerging Market ◽  
Unemployment Rates ◽  
Inflation Volatility ◽  
Unemployment Volatility ◽  
The Impact ◽  
Fiscal And Monetary Policy

In this paper, I explain theoretically the coordination and conflict scheme of fiscal and monetary policy workings, and then empirically assess the effect of both inflation-targeting and non-inflation-only targeting policies on inflation and unemployment rates. I employ a difference-in-difference method to estimate the impact on inflation, the unemployment rate, and their volatilities in both 10 inflation-targeting (single-mandate) and 11 non-inflation-targeting (multiple-mandate) countries specifically from the sample of developing economies over the period from 1998 to 2018. Our key findings show that while the inflation-targeting countries effectively present a reduction in inflation and inflation volatility, the effects on the unemployment rate are negligible, while unemployment volatility is higher in the period 1998–2008. Finally, the paper argues that the unemployment rate should be used as a natural second target in a typical emerging-market economy case.

scholarly journals Determinants of food price inflation in Finland

2012 ◽  
pp. 1-7 ◽  
Author(s):  
Xavier Irz ◽  
Jyrki Niemi ◽  
Liu Xing
Keyword(s):  
Food Chain ◽  
Complex Structure ◽  
Food Prices ◽  
Food Price ◽  
Price Formation ◽  
Price Inflation ◽  
Vec Model ◽  
Long Run ◽  
The Impact ◽  
Long Run Equilibrium

The agricultural commodity crisis of 2006-8 and the recent evolution of commodity markets have reignited anxieties in Finland over fast-rising food prices and food security. Although the impact of farm commodity price shocks on the final consumer is mitigated by a large degree of processing as well as the complex structure of the food chain, little is known about the strength of the linkages between food markets and input markets. Using monthly series of price indices from 1995 to 2010, we estimate a vector error-correction (VEC) model in a co-integration framework in order to investigate the short-term and long-term dynamics of food price formation. The results indicate that a statistically significant long-run equilibrium relationship exists between the prices of food and those of the main variable inputs consumed by the food chain, namely agricultural commodities, labour, and energy. When judged by the magnitude of long-run pass-through rates, farm prices represent the main determinant of food prices, followed by wages in food retail and the price of energy. However, highly volatile energy prices are also important in explaining food price variability. The parsimonious VEC model suggests that the dynamics of food price formation is dominated by a relatively quick process of adjustment to the long-run equilibrium, the half life of the transitional dynamics being six to eight months following a shock.

scholarly journals The effectiveness of the inflation targeting regime as the basis for monetary policy in the conditions of crisis in the economy

2021 ◽  
pp. 20
Author(s):  
Oleksandr Dziubliuk
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Large Scale ◽  
Inflation Targeting ◽  
Developing Economies ◽  
Developed Countries ◽  
Gradual Transition ◽  
Monetary Regime ◽  
Low Efficiency ◽  
The Impact

Introduction. Inflation targeting, as a commitment by the central bank to adhere to quantitative inflation rates, has become a fairly common monetary regime in the last few decades in developed countries and developing economies. However, the impact of the pandemic crisis on the course of economic processes has revealed serious problems associated with the low efficiency of this regime. Therefore, there is an objective need to re-evaluate the system in which the central bank focuses monetary regulation solely on price stability, ignoring other strategic directions of government policy related to the need to save economic activity and prevent a large-scale recession.Purpose. Clarification of the peculiarities of the implementation of monetary policy on the basis of the inflation targeting regime and identification of problematic aspects of this regime in the conditions of external shocks and the unfolding economic crisis.Methods. General scientific and empirical techniques and tools of economics, methods of analysis and synthesis, comparison, compilation and grouping are used.Results. The crisis indicates the need to build a monetary regime that would meet the interests of sustainable economic growth and social welfare. In Ukraine, there were no proper initial preconditions for the inflation targeting regime implementation. Therefore, adjusting the priorities of monetary policy in the crisis should reflect the gradual transition to a more flexible regime using monetary methods to support households and businesses, promote job creation, and stimulate aggregate demand.Prospects. Research of ways to increase the level of flexibility of monetary regulation, opportunities to expand the mandate of the central bank and improve the choice of optimal areas of influence on the economy with the help of monetary instruments at its disposal.

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