Understanding Inflation in Emerging and Developing Economies
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...
| Main Authors: | , , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/816031551363524517/Understanding-Inflation-in-Emerging-and-Developing-Economies http://hdl.handle.net/10986/31338 |
| Summary: | 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. |
|---|