Political Stability and Inflation Rate Nexus in Selected MENA Countries (in Persian)

Hassan Heidari (), Rana Asghari () and Roghayyeh Alinejad ()
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Hassan Heidari: urmia university
Rana Asghari: urmia university
Roghayyeh Alinejad: urmia university

Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), 2016, vol. 9, issue 27, 83-108

Abstract: The present study investigates the potential threshold effects in the relationship between political stability index and inflation rate for 16 countries from MENA countries with presence of other variables, including GDP growth, government consumption expenditures growth, liquidity and openness index over the period 1996-2014. For this purpose, the paper uses the Panel Smooth Transition Regression (PSTR) model. The estimation results of model reject the linearity hypothesis, and estimate a continuous transition function with two regimes that gives a threshold at political stability of 0.756 for under review countries. Moreover the study results indicate political stability index, GDP growth and openness index have a negative impact on inflation rate that their impacts are increased in the values above a threshold is calculated for political stability. The other results indicate that the influencing coefficients of the government consumption expenditures growth and liquidity variables are positive and significant in two regimes. Though, their impacts are declined in second regime. In general, the results of this study confirm the results of many done studies about positive effects of government consumption expenditure growth and liquidity and also negative effects of political stability index, GDP growth and openness index on inflation rate.

JEL-codes: C23 O53 O55 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmbres:v:9:y:2016:i:27:p:83-108

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