Understanding Inflation in Emerging and Developing Economies

Jongrim Ha, Ayhan Kose and Franziska Ohnsorge

No 8761, Policy Research Working Paper Series from The World Bank

Abstract: Emerging market and developing economies (EMDEs) have experienced an extraordinary decline in inflation since the early 1970s. After peaking in 1974 at 17.3 percent, inflation in these economies declined to 3.5 percent in 2017. Despite a checkered history of managing inflation among many EMDEs, disinflation occurred across all regions. This paper presents a summary of a recent book,"Inflation in Emerging and Developing Economies: Evolution, Drivers, and Policies,"that analyzes this remarkable achievement. The findings suggest that many EMDEs enjoy the benefits of stability-oriented and resilient monetary policy frameworks, including central bank transparency and independence. Such policy frameworks need to be complemented by strong macroeconomic and institutional arrangements. Inflation expectations are more weakly anchored in EMDEs than in advanced economies. In EMDEs that do not operate inflation targeting frameworks, exchange rate movements tend to have larger and more persistent effects on inflation.

Keywords: Inflation; Macroeconomic Management; Inequality; Financial Structures; International Trade and Trade Rules (search for similar items in EconPapers)
Date: 2019-02-28
New Economics Papers: this item is included in nep-mac and nep-mon
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Related works:
Working Paper: Understanding Inflation in Emerging and Developing Economies (2019)
Working Paper: Understanding inflation in emerging and developing economies (2019)
Working Paper: Understanding Inflation in Emerging and Developing Economies (2019)
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