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Inflation convergence among the next eleven economies: Evidence from asymmetric nonlinear unit root test

Aycan Hepsag ()

Theoretical and Applied Economics, 2017, vol. XXIV, issue 4(613), Winter, 43-52

Abstract: The purpose of the present paper is to investigate whether or not inflation convergence exists among the Next-Eleven (N-11) country members which are Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam, employing the asymmetric nonlinear unit root procedure of Sollis (2009). The data set involves monthly consumer price indices of N-11 countries for the period from January 1995 to April 2015 and the inflation rate differential of each country is calculated in order to test inflation convergence. The empirical results indicate that there exists inflation convergence among the economies of Bangladesh, Indonesia, Iran, South Korea, Mexico, the Philippines, Turkey and Vietnam. It is suggested that a common monetary policy would be designed and a successful monetary union would be constituted for these countries.

Keywords: inflation convergence; asymmetric nonlinear unit root test; next-eleven countries. (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:agr:journl:v:4(613):y:2017:i:4(613):p:43-52