Investigating the effect of economic complexity and political stability on inflation (Evidence from developing Asian countries)

اقتصاد پولی مالی

Article 10, Volume 30, Issue 26, July 2023, Pages 309-338   

Document Type: پژوهشی

DOI: 10.22067/mfe.2024.74070.1145

Authors

Mohammadtaher Ahmadishadmehri^{* 1}; fariba osmani²; mahdi cheshomi³

¹Ferdowsi university

²Ph.D student

³PhD student in economics

Abstract

Today, one of the problems of developing countries is increasing inflation. On the other hand, the political situation of many developing countries is also unstable. In addition, with the emergence and growth of new technologies and complex products, the effects and how the change of new structures affects the inflation rate are unclear.
The aim of this study is to investigate the effect of economic complexity and political stability on the inflation in a panel of 15 developing countries in Asia during the years 1997-2018 using panel-quantile regression. In addition, the variables of GDP per capita, liquidity and exchange rate were considered as the explanatory variables.

The results of quantile regression showed that the increase in liquidity and exchange rate increases inflation. As the economic complexity increases, the inflation rate decreases in all quantiles. In addition, increasing political stability helps to improve economic conditions and reduce inflation. Therefore, it can be concluded that inflation in developing countries is not only a monetary phenomenon and political and economic factors also affect it. In addition, the results of this study show that there is no significant relationship between GDP per capita and inflation, which indicates the verticality of the Phillips curve in the group of developing countries.

Keywords

Economic Complexity; Export Quality; Globalization; Ecological Footprint

References