Understanding Inflation in Emerging and Developing Economies

33 Pages Posted: 7 Mar 2019

See all articles by Jongrim Ha

Jongrim Ha

World Bank Group

M. Ayhan Kose

Development Prospects Group at the World Bank

Franziska Ohnsorge

World Bank

Multiple version iconThere are 3 versions of this paper

Date Written: March 7, 2019

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 our recent book, “Inflation in Emerging and Developing Economies: Evolution, Drivers, and Policies,” that analyzes this remarkable achievement. Our 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: Prices, Inflation, Monetary Systems, Monetary Policy, Globalization

JEL Classification: E31, E42, E52, E58, F62

Suggested Citation

Ha, Jongrim and Kose, M. Ayhan and Ohnsorge, Franziska, Understanding Inflation in Emerging and Developing Economies (March 7, 2019). CAMA Working Paper No. 22/2019. Available at SSRN: https://ssrn.com/abstract=3348138 or http://dx.doi.org/10.2139/ssrn.3348138

Jongrim Ha

World Bank Group ( email )

1818 H STREET
Washington, WA WA 20433
United States
9178250002 (Phone)

M. Ayhan Kose (Contact Author)

Development Prospects Group at the World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Franziska Ohnsorge

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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