Inflation in the aftermath of financial crises

Juergen Kaehler and Christoph Weber

Economic Modelling, 2023, vol. 128, issue C

Abstract: There has been a plethora of financial crises in the past decades. One of the main economic questions is what effects these financial crises have. Previous studies have mainly analysed the effects on GDP growth. However, there is still a gap in analysing the effect of financial crises on inflation. This study tries to fill this gap by employing a large panel data set on financial crises including countries from all over the world. The empirical analysis confirms the conjecture that banking and currency crises lead to higher inflation rates. After controlling for other causes of inflation, we find an economically and statistically significant impact of banking and currency crises on inflation. Countries that have experienced a banking or currency crisis tend to have higher inflation rates in the medium term. Furthermore, sovereign debt crises also raise inflation rates.

Keywords: Banking crises; Financial crises; Inflation (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 G01 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:128:y:2023:i:c:s0264999323003243

DOI: 10.1016/j.econmod.2023.106512

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