Structural Inflation in Developing Countries

Argy, Victor

doi:10.1093/oxfordjournals.oep.a041153

Cited by 30 publications

(10 citation statements)

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“… For more on the monetarist‐structuralist debate, see Campos (); Argy (); Thirlwall (); Wachter (); Taylor (); Johnson (); Ghatak and Sánchez‐Fung (); and Thirlwall and Pacheco‐López ().…”

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confidence: 99%

Re‐Examining the Role of Structural Change and Nonlinearities in a Phillips Curve Model for South Africa

Nell¹

2018

South African J Economics

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Although studies generally find evidence of a Phillips curve‐type relationship in South Africa, uncertainty remains about the relevance of the model over a relatively long sample period, and whether conventional output gap measures are suitable proxies for demand pressure. This paper reviews research which shows that the Phillips curve model prevails over an extended sample, provided that the benchmark specifications include major structural changes in the balance‐of‐payments and labour market, and account for shifts in the root causes of inflation. When this is done, a linear specification with an output gap in levels correctly predicts the non‐trended inflation pattern over the period 1971(Q1)–1984(Q4), whereas a piecewise concave curve with an output gap in growth rates accurately forecasts the decelerating inflation pattern during 1986(Q1)–2001(Q2). A novel feature of the concave model is that it remains statistically robust and structurally stable when it is estimated until 2015(Q4). The concave model imparts a disinflationary bias, which suggests that monetary policy should be more expansionary during downswing phases of the business cycle and neutral during upswing phases. The analysis also considers how the shape of the Phillips curve might change if the balance‐of‐payments constraint on demand is relaxed in a significant way.

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confidence: 99%

Re‐Examining the Role of Structural Change and Nonlinearities in a Phillips Curve Model for South Africa

Nell¹

2018

South African J Economics

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“…Changes in food prices (PFD) are assumed to be a function of changes in domestic food supply per 50 The basic structure has been derived from other work in this area (see for example Khan and Knight (1981), and Chhibber and Shafik (1990)), but differs in that explicit attention is given to the impact of agricultural bottlenecks and changes in the retail prices of petroleum products on inflation. For a similar study in which the structural factor of excess demand for agricultural production is combined with the monetarist factor of changes in the rate of growth of the money supply in order to explain changes in the general price level, see Argy (1970). Theoretical discussions of the relationship between the structuralist and the monetarist explanation of inflation are presented in Kirkpatrick and Nixson (1976), and London (1989).…”

Section: Pet= Pet (2)mentioning

confidence: 99%

“…capita food supply, a quarterly indicator was constructed, based on the annual national accounts estimate for real value added in agriculture (excluding cocoa, forestry, and fishing), population growth, and a simple seasonal pattern (based on information about the rain patterns) according to which food supply during the first half of the year is lower than the annual average, while supply during the rest of the year is above average. 53 Given the volatility in quarterly changes in money supply and the relevance of underlying monetary developments for inflation, the average increase in broad money in the current and the two preceding quarters {AMI) was selected as the ex-53 Argy (1970) uses two alternative indices for excess demand for agricultural output: the first measure is the rate of growth of demand, based on an elasticity of demand with respect to population growth of one and an income elasticity of demand of 0.6, minus the actual growth of agricultural production, while the second measure is simply the average annual rate of change in food prices minus the average annual rate of change in the cost of living. The specification used in this paper is similar to Argy's first measure, the main difference being that no explicit income elasticity of demand is assumed.…”

Section: Pnt=f(ed Pf+ [B(t)eo + (L-b(t))ep] Udc) (4)mentioning

confidence: 99%

Ghana: Adjustment and Growth, 1983-91

Kapur¹,

Schiff²,

Hadjimichael³

et al. 1991

Occasional Papers

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This paper is based on internal staff reports and research papers prepared in connection with consultations between the IMF and Ghana during 1989-91 and includes information available through June 1991. The authors would like to acknowledge the support of officials of Ghana in the preparation of the paper. They are also indebted to Evangelos A. Calamitsis and Reinold H. van Til for their valuable comments, Ian McDonald and David Driscoll for editorial advice, and Elisabeth Baker for secretarial assistance. The authors bear sole responsibility for any factual errors.The opinions expressed in the paper are those of the authors and should not be construed as representing the views of the Government of Ghana, Executive Directors of the IMF, or other members of the IMF staff.

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“…And in the words of Friedman (1956), inflation is always and everywhere a monetary phenomenon and can be reduced only by more rapid increase in the quantity of money than output. Some other economists like Argy (1978), Harberger (1978) however do not agree that money supply is the only cause of inflation. The structuralists' school of inflation stresses structural rigidities as the principal cause of inflation in developing countries.…”

Section: Introductionmentioning

confidence: 99%

Inflationary pressure in Nigeria: the structuralists’ approach

Sanni¹,

Folarin²

2010

Afr. Res. Rev.

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Opinions differ on the right solutions to inflation in Nigeria. This is due mainly to the fact that while a school of thought sees inflation as a fundamental monetary phenomenon, another school sees it as structural. This paper examined the structural aspect. Structural factors in Nigeria as principal causes of inflation were identified. These structural factors were grouped together under budget deficits, external reserves, and the level of the Nigerian economy (represented by the GDP). Using data on these variables for 32 years (1977-2008), and analyzing them with Co-integration and Error Correction Model (ECM), it was found that inflation is 77% affected by structural variables and that the Nigerian economy, as expected, is negatively correlated to inflation while budget deficits and external reserves are positively correlated. All the variables are significant at 5% significant level. The policy implication of the finding is that the supply management of curbing inflation cannot be ignored in tackling inflation in Nigeria.

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Structural Inflation in Developing Countries

Cited by 30 publications

References 0 publications

Re‐Examining the Role of Structural Change and Nonlinearities in a Phillips Curve Model for South Africa

Re‐Examining the Role of Structural Change and Nonlinearities in a Phillips Curve Model for South Africa

Ghana: Adjustment and Growth, 1983-91

Inflationary pressure in Nigeria: the structuralists’ approach

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