Inflation and real exchange rate and macroeconomic gaps: causality for 50 emerging and developing countries

Ricardo Moreira ()
Additional contact information
Ricardo Moreira: Federal University of Espírito Santo

Economics Bulletin, 2019, vol. 39, issue 1, 142-158

Abstract: This article presents and tests two opposing hypotheses regarding the causality relationships between the inflation rate (as well as the real exchange rate) and macroeconomic gaps, especially the investment-domestic savings gap. For empirical purposes, the Dumitrescu and Hurlin (2012) method for Granger causality in panel data was applied to annual series from 1995 to 2014, covering a group of 50 emerging and developing countries. Furthermore, we also applied different methods for Dynamic Panel Data, specifically Difference and System GMM regressions. The empirical findings indicated a complementarity of both theoretical perspectives to explain the aforementioned relations, although these results are more robust for the conventional hypothesis.

Keywords: GDP; Domestic absorption; Investment; Domestic savings; Inflation; Real Exchange; Panel Data (search for similar items in EconPapers)
JEL-codes: E1 E6 (search for similar items in EconPapers)
Date: 2019-01-13
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I1-P15.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-17-00496

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().