Determinants of inflation: Evidence from ASEAN-5 countries

Topic involving inflation has generated an enormous volume of literature and heated debate in recent years. It is important to study inflation because the consequences of inflation is terrible. By explaining inflation, different school of thought view the contrast cause and have different policies f...

Full description

Saved in:

Bibliographic Details
Main Author:	Farah Dina, Zakaria
Format:	Thesis
Language:	eng eng
Published:	2016
Subjects:	HC Economic History and Conditions HG Finance
Online Access:	https://etd.uum.edu.my/6078/1/s817759_01.pdf https://etd.uum.edu.my/6078/2/s817759_02.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-uum-etd.6078
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Nayan, Sabri
topic	HC Economic History and Conditions HG Finance
spellingShingle	HC Economic History and Conditions HG Finance Farah Dina, Zakaria Determinants of inflation: Evidence from ASEAN-5 countries
description	Topic involving inflation has generated an enormous volume of literature and heated debate in recent years. It is important to study inflation because the consequences of inflation is terrible. By explaining inflation, different school of thought view the contrast cause and have different policies for fighting inflation. This study examines the relationship between selected independent variable towards inflation and theory that can explain inflation in ASEAN-5 countries using panel data analysis. This study used panel data spanning from year 1990 to 2014. A panel data approach was used to straighten out the time invariant country-specific effect and to reveal the relationship between the important variables across time. The results presented that fixed effect model was appropriate over the random effect models in this inflation model studied. Interestingly, the variables, namely wages, import, interest rate and gross domestic product were found to be significant determinants of inflation in ASEAN-5 countries. But, only money supply found to be insignificant by explaining the inflation in this sample of study. Based on these results, this study support the Post Keynesians view of inflation and several policy implications and recommendations were suggested.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Farah Dina, Zakaria
author_facet	Farah Dina, Zakaria
author_sort	Farah Dina, Zakaria
title	Determinants of inflation: Evidence from ASEAN-5 countries
title_short	Determinants of inflation: Evidence from ASEAN-5 countries
title_full	Determinants of inflation: Evidence from ASEAN-5 countries
title_fullStr	Determinants of inflation: Evidence from ASEAN-5 countries
title_full_unstemmed	Determinants of inflation: Evidence from ASEAN-5 countries
title_sort	determinants of inflation: evidence from asean-5 countries
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2016
url	https://etd.uum.edu.my/6078/1/s817759_01.pdf https://etd.uum.edu.my/6078/2/s817759_02.pdf
_version_	1747828017654136832
spelling	my-uum-etd.60782021-04-05T02:16:19Z Determinants of inflation: Evidence from ASEAN-5 countries 2016 Farah Dina, Zakaria Nayan, Sabri Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HC Economic History and Conditions HG Finance Topic involving inflation has generated an enormous volume of literature and heated debate in recent years. It is important to study inflation because the consequences of inflation is terrible. By explaining inflation, different school of thought view the contrast cause and have different policies for fighting inflation. This study examines the relationship between selected independent variable towards inflation and theory that can explain inflation in ASEAN-5 countries using panel data analysis. This study used panel data spanning from year 1990 to 2014. A panel data approach was used to straighten out the time invariant country-specific effect and to reveal the relationship between the important variables across time. The results presented that fixed effect model was appropriate over the random effect models in this inflation model studied. Interestingly, the variables, namely wages, import, interest rate and gross domestic product were found to be significant determinants of inflation in ASEAN-5 countries. But, only money supply found to be insignificant by explaining the inflation in this sample of study. Based on these results, this study support the Post Keynesians view of inflation and several policy implications and recommendations were suggested. 2016 Thesis https://etd.uum.edu.my/6078/ https://etd.uum.edu.my/6078/1/s817759_01.pdf text eng public https://etd.uum.edu.my/6078/2/s817759_02.pdf text eng public masters masters Universiti Utara Malaysia Adu, G., & Marbuah, G. (2011). Determinants of inflation in Ghana: An Emperical Investigation. South African Journal of Economics, 79(3), 251–269. doi:10.1080/00036849300000051. Agba, V. . (1994). Principle of Macroeconomics. Lagos: Concept Publication Limited. Agenor, P.-R., & Hoffmaister, A. W. (1997). Money, Wages and Inflation in Middle-Income Developing Countries (Vol. 174). Retrieved from http://www.countryanalyticwork.net/Caw/CawDocLib. nsf/5c5c47bfc0561e8c85256c5e000f5efd/98605C19C847FC 4585256D7400707470/$file/wp01160.pdf Alavinasab, S. M. (2014). Determinants of Inflation: The Case of Iran. International Journal of Social Science and Management, 1(1), 71–77. Altowaijri, H. a. (2011). Determinants of Inflation in Saudi Arabia Altowaijri. World Review of Business Research, 1(4), 109–114. Anugrah, D. F. (2014). Economic growth, inflation, and monetary policy : Indonesian regions as a case study. Arif, K. M., & Ali, M. M. (2012). Determinants of Inflation in Bangladesh : An Empirical Investigation. Journal of Economic and Sustainable Development, 3(12), 9–17. Ashwani. (2014). Determinants Of Inflation In India: A Co-Integration Approach I. INTRODUCTION. International Journal of Multidisciplinary Consortium, 1(1), 1–11. Association of Southeast Asian Nation. (2016). Association of Southeast Asian Nation. Retrieved November 23, 2015, from http://www.asean.org/asean/aboutasean/ Asteriou, D., & Hall, S. (2011). Applied Econometrics (Second edi). Millan: Palgrave macmillan. Atesoglu, H. S. (1980). Inflation and Its Acceleration : Evidence from the Postwar United States. Journal of Post Keynesian Economics, 3(1), 105–115. doi:10.1080/01603477.1980.11489200. Atesoglu, H. sonme. (1997). A post keynesian explanation of U.S inflation. Journal of Post Keynesian Economics, 19(4), 639–649. Azam, M., & Rashid, S. (2014). The monetarist hypothesis of inflation in Pakistan – a critique. Journal of the Asia Pacific Economy, 20(4), 559-576. doi:10.1080/13547860.2014.970324. Baltagi, B. H. (2005). Econometric Analysis of Panel Data (John Wiley). West Sussex. Bandara, R. (2011). The Determinants of Inflation in Sri Lanka: An Application of the Vector Autoregression Model. South Asia Economic Journal, 12(2), 271–286. doi:10.1177/139156141101200204. Bashir, F., Nawaz, S., Yasin, K., Khursheed, U., Khan, J., & Qureshi, M. J. (2011). Determinants of inflation in Pakistan: An econometric analysis using Johansen co-integration approach. Australian Journal of Business and Management Research, 1(5), 71–82. Retrieved from http://www.ajbmr.com/articlepdf/ajbmrv01n0509.pdf. Bayo, F. (1996). Determinants of Inflation in Nigeria : An Empirical Analysis. International Journal of Humanities and Social Science, 1(18), 262–271. Bloch, H., Dockery, A. M., & Sapsford, D. (2004). Commodity Prices, Wages, and U.S. Inflation in the Twentieth Century. Journal of Post Keynesian Economics, 26(3), 523–545. doi:10.1080/01603477.2004.11051404. Bronfenbrenner, M., & Holzman, F. D. (1963). Survey of Inflation Theory. American Economic Association, 53(4), 593–661. Cacnio, F. C. Q. (2012). Inflation Dynamics and Unemployment Rate in the Philippines. Bangko Sentral Ng Pilipinas. Economic Newsletter, 12-02 (Mar - Apr 2012), 1–5. Cheng, M.-Y., & Tan, H.-B. (2002). Inflation in Malaysia. International Journal of Social Economics, 29, 411–425. doi:10.1108/03068290210423532 Cheung, Y. W., & Yuen, J. (2002). Effects of US inflation on Hong Kong and Singapore. Journal of Comparative Economics, 30(3), 603–619. doi:10.1006/jcec.2002.1787. Crichton, D. R. (2006). Inflation Dynamics in Malaysia. Inflation Dynamics in Malaysia, 1–31. Darby, M. R. (1982). The Price of Oil and World Inflation and Recession. The American Economic Review, 72(4), 738–751. Darrat, A. F. (1985). The monetary explanation of inflation: The experience of three major OPEC economies. Journal of Economics and Business, 37, 209–221. doi:10.1016/0148-6195(85)90018-9. Davidson, P. (1991). Controversies in Post Keynesian Economics. Edward Elgar Publising Limited. Davidson, P. (2011). Post Keynesian Macroeconomic Theory, Second Edition. A Foundation for Successful Economic Policies for the Twenty-First Century. Edward Elgar Publising Limited. Downward, P. (1995). A Post Keynesian Perspective of U . K . Manufacturing Pricing. Journal of Post Keynesian Economics, 17(3), 403–426. doi:10.1080/01603477.1995.11490037 Economic Explore Series 3. (n.d.). Inflation. Economic Policy Department. Ee, K. H. (2005). Comments on “ Monetary policy regimes and macroeconomic outcomes : Hong Kong and Singapore ” by Stefan Gerlach and Petra Gerlach- Kristen, (31), 65–70. Engle, R. F., & Granger, C. W. J. (1987). Co-integration and Error Correction: Representation, Estimation, and Testing. Econometrica, 55(2), 251–276. doi:http://dx.doi.org/10.2307/1913236. Friedman, M. (1970). The Counter-Revolution in Monetary Theory. IEA Occasional Paper, (33), 14. doi:10.1017/CBO9781107415324.004. Furuoka, F., & Munir, Q. (2009). “ Phillips Curve” in selected ASEAN countries: new evidence from panel data analysis. Sunway Academic Journal. Retrieved from http://eprints.sunway.edu.my/65/. Gisser, M., & Goodwin, H. (1986). Crude Oil and the Macroeconomy : Tests of Some Popular Notions A Note by Micha Gisser and Thomas. Journal of Money, Credit and Banking, 18(1), 95–103. Granger, C. W. J. (1988). Causality, cointegration, and control. Journal of Economic Dynamics and Control, 12, 551–559. doi:10.1016/0165-1889(88)90055-3 Greene, W. (2005). Reconsidering heterogeneity in panel data estimators of the stochastic frontier model. Journal of Econometrics, 126, 269–303. doi:10.1016/j.jeconom.2004.05.003. Gujarati, D. N. (2003). Basic Econometrics (Fourth Edi). New York: McGraw Hill. Gyebi, F., & Boafo, G. (2013). Macroeconomic Determinants of Inflation in Ghana From 1990–2009. International Journal of Business and …, 3(6), 81–93. Retrieved from http://thejournalofbusiness.org/index.php/site/ article/view/48 Haile, K. T. (2013). The Determinants of Inflation in Botswana and Bank of Botswana’s Medium-Term Objective Range. Botswana Journal of Econommics,11. Hamilton, J. D. (1983). Oil and the Macroeconomy since World War II. Journal of Political Economy, 91(2), 228. doi:10.1086/261140. Hausman, J. ., & Taylor, W. . (1981). Panel Data and Unobservable Individual Effects. Econometrica, 49(6), 1377=1398. Hossain, A. (2005). The Sources and Dynamics of Inflation in Indonesia: An ECM Model Estimation for 1952-2002. Applied Econometrics and International Development, 5(4), 93–116. Retrieved from http://ideas.repec.org/a/eaa/aeinde/v5y2005i4_6. html. Hossain, M. T. (2013). An Econometric Analysis of the Determinants of Inflation. The Internatioanl Journal of Social Science, 11, 29–36. Hsiao, C. (2003). Analysis of Panel Data (Second Edi). United Kingdom: Cambridge University Press. Humphrey, T. H. (1975). A Monetarist Model Of The Inflationary Process. Economic Review, 25(2), 13–23. Retrieved from http://search.ebscohost.com/ login.aspx?direct=true&db=bth&AN=4660016&site=ehost -live&scope=site. Indonesia-Investment. (2016). Asian Financial Crisis in Indonesia. Retrieved February 14, 2016, from http://www.indonesia-investments.com/culture/ economy/asianfinancial-crisis/item246. International Monetary Data. (2015). IMF Data. Retrieved from http://www.imf.org/en/data. Jiang, C., Chang, T., & Li, X.-L. (2015). Money growth and inflation in China: New evidence from a wavelet analysis. International Review of Economics & Finance, 35(May 2014), 249–261. doi:10.1016/j.iref.2014.10.005. Jiranyakul, K., & Opiela, T. P. (2010). Inflation and inflation uncertainty in the ASEAN-5 economies. Journal of Asian Economics, 21(2), 105–112. doi:10.1016/j.asieco.2009.09.007. Jitsuchon, S., & Siamwalla, A. (2009). Economic Shocks and Vulnerable Thailand: A Case Study of Rising Food and Fuel Prices. paper submitted to United Nations Thailand. Retrieved from http://www.unicef.org/socialpolicy/files/Thailand_ Discussion_Paper_Economic_Shocks_and_Vulnerable_ Mar2.pdf Kasadi, F., & Mwakanemela, K. (2013). Impact of Inflation on Economic Growth : a Case Study of Tanzania. Asian Journal of Empirical Research, 3(4), 363–380. Khai, T. M. (2011). Determinants of inflation in Malaysia 1981-2010. Kim, B.-Y. (2001). Determinants of Inflation in Poland: A Structural Cointegration Approach. Kogid, M., Asid, R., Mulok, D., Lily, J., & Loganathan, N. (2011). Inflation-Unemployment Trade-Off relationship in Malaysia. Asian Journal of Business and Management Sciences, 1(1), 100–108. Retrieved from http://medcontent.metapress.com/ index/A65RM03P4874243N.pdf\nhttp://www.ajbms.org/ articlepdf/ajbms_2011_1124.pdf Kok, C. (2014). Moderate outlook for Asean-5 economies. Retrieved March 28, 2016, from http://www.thestar.com.my/business/business-news/ 2014/05/03/moderateoutlook-for-asean5-economies- malaysia-may-be-the-only-country-in-theregion-to- see-growth-a/ Kushwaha, P., & Stjernberg, A. (2011). Inflation Targeting Framework Evaluation : A Case of Thailand. Laryea, S. a., & Sumaila, U. R. (2001). Determinants of inflation in Tanzania. Working Paper - Chr. Michelsen Institute, 1–17. doi:10.1108/10264116200700005 Leblanc, M., & Chinn, M. C. (2004). Do High Oil Prices Presage Inflation? Do High Oil Prices Presage Inflation? Lim, J. (1987). Journal of Development Economics 25 (1987) 45-61. North-Holland, 25, 45–61. Lim, J. (2006). Philippine Monetary Policy: A Critical Assessment and Search for Alternatives. International Review of Applied Economics. Maku, A. O., & Adelowokan, O. A. (2013). Dynamic of Inflation in Nigeria: An Autoregressive Approach. European Journal of Humanities and Social Science, 22, 1175–1184. Mbutor, M. . (2014). Inflation in Nigeria:How Much is the Function of Money? Journal of Economics and International Finance, 6, 21–27. McCauley, R. N. (2006). Understanding Monetary Policy in Malaysia and Thailand : Objectives, Instruments and Independence. Social Development, (31), 172–198. McNabb, R., & McKenna, C. (1990). Inflation in modern Economies. Hertfordshire: Harvester Wheatsheaf. Melberg, H. O. (1992). Inflation: An overview of theories and solutions. Retrieved from http://www.oocities.org/hmelberg/papers/921201.htm Monfort, B., & Pena, S. (2008). Inflation Determinants in Paraguay: Cost Push versus Demand Pull Factors. Narayan, P., & Smyth, R. (2009). The effect of inflation and real wages on productivity: new evidence from a panel of G7 countries. Applied Economics, 41(10), 1285–1291. doi:10.1080/00036840701537810 Oseni, E. (2013). Acheiving Price Stability in Nigeria: Monetary Policy Rate Approach vs Foreign Exchange Policy Approach. Australian Journal of Business and Management Research, 3, 32–43. Parkin, M., & Laidler, D. (1975). Inflation : A Survey. The Economic Journal, 85(340), 741–809. Perry, N., & Cline, N. (2013). Wages, Exchange Rates, and the Great Inflation Moderation: A Post Keynesian View. Pooittiwong, A., & Ramirez, B. (2016). ASEAN Economic Integration: Opportunities and Challenges that Lie Ahead. Retrieved March 20, 2016, from http://intpolicydigest.org/2016/01/06/asean-economic-integration-opportunitiesand-challenges- that-lie-ahead/ Puzon, K. A. M. (2009). The Inflation Dynamics of the ASEAN-4 : A Case Study of the Phillips Curve Relationship. Journal of American Science, 5(1), 55–57. Ramakrishnan, U., & Vamvakidis, A. (2002). Forecasting Inflation in Indonesia. Rasidah, M. S., & Hawati, J. (2001). The Long-Run Relationship between Nominal Interest Rates and Inflation of the Asian Developing Countries The Long-Run Relationship between Nominal Interest Rates and Inflation of the Asian Developing Countries. Jurnal Ekonomi Malaysia, 35, 3–11. Robinson, J. (1938). Review. The Economic Journal, 48(191), 507–513. Rousseau, P. L., & Wachtel, P. (2002). Inflation thresholds and the finance-growth nexus. Journal of International Money and Finance, 21, 777–793. doi:10.1016/S0261-5606(02)00022-0 Sausa, J., & Zaghini, A. (2008). Monetary Policy Shocks in the Euro area and Global Liquidity Spillovers. International Journal of Finance & Economcs, 13, 205–218. Shahbaz, M. (2013). Linkages between inflation, economic growth and terrorism in Pakistan. Economic Modelling, 32(i), 496–506. doi:10.1016/j.econmod.2013.02.014 Sola, O., & Peter, A. (2013). Money Supply and Inflation in Nigeria : Implications for National Development. Modern Economy, 4, 161–170. Statistics-Indonesia. (2013). ASEAN statistic in focus. Badan Pusat Statistik. Tafti, F. (2012). Determinants of inflation in Islamic Republic of Iran. Journal of Business and Social Science, 3(6), 197–203. Retrieved from http://www.ijbssnet.com/journals/Vol_3_No_6_Special_Issue_March_2012/24.pdf Tcherneva, P. R. (2001). Money: A comparison of the Post Keynesian and Orthodox Approaches. Oeconomicus, IV, IV, 109–114. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.194.6435&rep=rep1&type=pdf Thanh, S. D. (2015). Threshold effects of inflation on growth in the ASEAN-5 countries: A Panel Smooth Transition Regression approach. Journal of Economics Finance and Administrative Science, 20(38), 41–48. doi:10.1016/j.jefas.2015.01.003 The Economists. (2009). Falling inflation is providing relief to Asian economies. Retrieved January 19, 2016, from http://www.economist.com/node/13186114 The World Bank. (2015). Data. Retrieved from http://data.worldbank.org/ Tirtosuharto, D., & Adiwilaga, H. (2013). Decentralization and Regional Inflation in Indonesia. Buletin Ekonomi Monete Dan Perankan, 149–166. Totonchi, J. (2011). Macroeconomic Theories of Inflation. International Proceedings of Economics and Finance Research, 4, 459–462. Retrieved from http://search.ebscohost.com/login.aspx?direct= true&profile=ehost&scope=site&authtype=crawler& jrnl=20104626&AN=74459100&h=B%2F1icPHHZZYm1fRY9v7 vJKc6Kbklvg3hKzwg1z%2BMGL2onVVZfJLwswamdsVjtjvfOJy 7RxESB6DyNgCuKJYv3g%3D%3D&crl=c Utomo, F. W. (2013). Pengaruh Inflasi dan Upah Terhadap Pengangguran Di Indonesia Periode Tahun 1980-2010. Jurnal Ilmiah. Wang, P., & Wen, Y. (2006). Research Division ation Dynamics : A Cross-Country Investigation. Federal Reserve Bank of St. Louis. Wattanmakoon, P. (2013). Exchange rate pass-through and inflation in Thailand. Thammasat Economic Journal, 31(2), 1–17. Weintraub, S. (1978). The Missing Theory of Money Wages. Journal of Post Keynesian Economics, 1(March), 59–78. doi:10.1080/01603477.1978.11489102 Whitney, S. N. (1982). Inflation Since 1945 Facts and Theories. New York: Praeger Publishers. Wimanda, R. E. (2009). Inflation and Monetary Policy Rules: Evidence from Indonesia. PQDT - UK & Ireland. Retrieved from http://search.proquest.com/docview/1314577933?accountid=13771 Yap, J. T. (1996). Inflation and Economic Growth in the Philippines. Yellen, J. L. (1980). On Keynesian Economics and the Economics of the Post-Keynesians. American Economic Review, 70(2), 15–19. doi:10.2307/2325823

Determinants of inflation: Evidence from ASEAN-5 countries

Similar Items