Political instability, political freedom and inflation

Telatar, Erdinç; Telatar, Funda; Çavuşoğlu, Tarkan; Tosun, Umur

doi:10.1080/00036840802360237

Cited by 19 publications

(17 citation statements)

References 26 publications

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“…Additionally, Telatar et al . () assume that governments may abuse the monetary policy by forcing monetary authorities to create a monetary surprise in order to increase output in the short run, which results in high inflation without real gain. Hence, monetary policy should be taken out of the hands of politicians in order to eliminate inflationary bias.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Political Instability on Inflation Volatility in Africa

Barugahara

2014

South African J Economics

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This paper investigates whether political instability leads to volatile inflation using a panel of 49 African countries. The study uses novel measures of political instability, particularly the state failure index and state fragility index. In the field of political instability and inflation volatility, this is the first study to measure inflation volatility as the conditional variance of inflation estimated from GARCH (1, 1) model. Adopting the system‐generalized method of moments estimator for linear dynamic panel models for the sample period 1985‐2009, the study documents a positive statistically significant effect of political instability on inflation volatility.

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Section: Literature Reviewmentioning

confidence: 99%

The Impact of Political Instability on Inflation Volatility in Africa

Barugahara

2014

South African J Economics

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“…It is essential to address the budget balance because, in the short run, it becomes crucial for the government to control inflation in the country [20]. Also, political instability has a significant relationship with rising inflation, as reported by Barugahara [21], Aisen & Veiga [22], and Telatar et al [23]. As discussed earlier, the political instability means certain challenges in Malaysia, which is given less importance in the previous studies, even though it causes a high inflation rate [20,21].…”

Section: Introductionmentioning

confidence: 99%

Fiscal Deficit and Its Less Inflationary Sources of Borrowing with the Moderating Role of Political Instability: Evidence from Malaysia

2020

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Theoretically, fiscal deficit may be inflationary, but its sources of financing can bring change in significance and impact. Malaysia is facing a high tendency of fiscal deficit from the last decade. To finance the fiscal deficit, which sources are less inflationary in the country? To answer this question, the study aims to analyze the quarterly financial time-series data covering the period from 2000 Q1 to 2018 Q4 of Malaysia using recent econometric techniques. The analysis is carried out in three stages. In the first stage, it is tested that the fiscal deficit is inflationary along with the money supply. In the second stage, it is determined that political instability moderates the link between inflation and the fiscal deficit and the external sources of borrowing in the short-run, while the domestic sources of borrowing in the long run are found inflationary. In the third stage, the central bank borrowing and Bank institutions borrowing from the domestic sources and the short-term borrowing from the external sources are found less inflationary. The findings suggest that borrowing through the central bank and bank institutions (domestic sources) is less inflationary in the long term; while for a short-term policy, from external sources, only short-term borrowing is less inflationary; medium- and long-term borrowing are much more sensitive to inflation.

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“…The relationship between political instability and inflation also attracts attention of researchers. For example, Khan and Saqib (2011), Aisen and Vega (2006), Aisen and Vega (2008) and Telatar et al (2010) all mostly examined the effects of political instability on inflation. There are two main approaches explaining the relationship between political instability and inflation: Fiscal Theory of Price Level (FTPL) determination, which stresses the excessive reliance of governments' seigniorage and the theories of Political Economy of Macroeconomic Policy, mainly emphasize that the price level is unrelated to money growth rate.…”

Section: Introductionmentioning

confidence: 99%

A BOOTSTRAP PANEL GRANGER CAUSALITY ANALYSIS OF RELATIONSHIPS BETWEEN POLITICAL INSTABILITY AND MACROECONOMIC VARIABLES / Politik İstikrarsızlık Ve Makroekonomik Değişkenler Arasındaki İlişkilerin Bootstrap Panel Nedensellik Testi İle Analizi

Özer

Kocaman

2019

Uluslararası Ekonomi İşletme Ve Politika Dergisi

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In this study, we try to analyze the causal relationship between political instability and macroeconomic variables for selected emerging markets such as Turkey, India, Russia, Mexico and Indonesia by using panel bootstrap causality tests over the period of 1992 and 2016. Selected macroeconomic variables are growth, inflation and exchange rate. Even though the results of the study differ across nations in the panel and not indicating to many causal relations, they provide the evidences of causal relations between political instability and some macroeconomic variables. Although it is hard to generalize the major findings of the study to all countries in the sample, still we can conclude that unlike the expectations, changes in most of the macroeconomic variables do cause in changes in political instability. Thus, achieving economic stability in terms of low inflation, high growth and stable exchange rate seem to be key factors to achieve political stability. POLİTİK İSTİKRARSIZLIK VE MAKROEKONOMİK DEĞİŞKENLER ARASINDAKİ İLİŞKİLERİN BOOTSTRAP PANEL NEDENSELLİK TESTİ İLE ANALİZİÖz Bu çalışmada Türkiye, Hindistan, Rusya, Meksika ve Endonezya yükselen piyasa ekonomileri için, 1992 ve 2016 dönemleri arasındaki verilerle, panel bootstrap nedensellik testini kullanarak politik istikrarsızlık ve makroekonomik değişkenler arasındaki nedensellik ilişkisini analiz etmek amaçlanmıştır. Seçilmiş makroekonomik değişkenler büyüme, enflasyon ve döviz kurudur. Çalışmanın sonuçları paneldeki ülkeler arasında farklılık gösterip çok fazla nedensellik ilişkisi olmadığını işaret etmesine rağmen, politik istikrarsızlık ve bazı makroekonomik değişkenler arasındaki nedensellik ilişkisinin kanıtlarını sunmaktadır. Çalışmanın ana bulgularını örneklemdeki tüm ülkelere genellemek zor olsa da, beklentilerden farklı olarak makroekonomik değişkenlerin çoğundaki değişikliklerin politik istikrarsızlıktaki değişikliklere neden olduğu sonucuna varabiliriz. Dolayısıyla, elde edilen bulgulara göre, düşük enflasyon, yüksek büyüme ve istikrarlı döviz kuru açısından ekonomik istikrarın sağlanması, politik istikrarın sağlanmasında kilit faktörler olarak görülmektedir.

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Political instability, political freedom and inflation

Cited by 19 publications

References 26 publications

The Impact of Political Instability on Inflation Volatility in Africa

The Impact of Political Instability on Inflation Volatility in Africa

Fiscal Deficit and Its Less Inflationary Sources of Borrowing with the Moderating Role of Political Instability: Evidence from Malaysia

A BOOTSTRAP PANEL GRANGER CAUSALITY ANALYSIS OF RELATIONSHIPS BETWEEN POLITICAL INSTABILITY AND MACROECONOMIC VARIABLES / Politik İstikrarsızlık Ve Makroekonomik Değişkenler Arasındaki İlişkilerin Bootstrap Panel Nedensellik Testi İle Analizi

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