 |
A P* Approach to Price Adjustment in Developing Countries: A Panel Study
Morling, Steven (2002-05-01) A P* Approach to Price Adjustment in Developing Countries: A Panel Study. Discussion Paper No. 306, School of Economics, The University of Queensland.
|
|
| |
| Attached Files (Some files may be inaccessible until you login with your UQ eSpace credentials) |
| Name |
Description |
MIMEType |
Size |
Downloads |
econ_dp_306_02.pdf
|
econ_dp_306_02.pdf |
application/pdf |
2.24MB |
86 |
| Author(s) |
Morling, Steven
|
| Title |
A P* Approach to Price Adjustment in Developing Countries: A Panel Study
|
| School, Department or Centre |
School of Economics
|
| Institution |
The University of Queensland
|
| Report Number |
Discussion Paper No. 306
|
| Publication date |
2002-05-01
|
| Subject |
340208 Macroeconomics (incl. Monetary and Fiscal Theory)
|
| Abstract/Summary |
This paper examines the role of disequilibrium conditions in influencing price adjustment processes in developing countries. Measures of real and financial sector disequilibrium are
constructed for a sample of 58 developing countries over the period 1973-1998 using structural VAR methodology. Panel data techniques are used to estimate a reduced-form P* model. Overall the
results suggest that inflation expectations are relatively forward looking in developing countries. This is consistent with the elevated inflation rates that many of these countries have
experienced over long periods of time. The evidence for the role of real or financial sector disequilibrium conditions in the price adjustment process is limited. The output gap is significant for
most countries, with the negative sign suggesting that temporary fluctuations in output, and subsequent price adjustment processes, reflect the response of output and prices to temporary supply
shocks. The velocity gap does not seem to play an important role, and the external price gap appears only to be significant for the African and Western Hemisphere regions.
|
| Keyword(s) |
price adjustment
developing countries
inflation
disequilibrium conditions
|
|
|
|
