Research ArticleOpen AccessGoogle Scholar indexed
Institutional Quality and Inflation
Institute of Forecasting and Macroeconomic Research, Tashkent, Uzbekistan
Institute of Forecasting and Macroeconomic Research, Tashkent, Uzbekistan
- 1 Institute of Forecasting and Macroeconomic Research, Tashkent, Uzbekistan
- 2 Institute of Forecasting and Macroeconomic Research, Tashkent, Uzbekistan
Copy link · social · email
Abstract
The purpose of this paper is to empirically analyze the effects of the quality of institutions on inflation. Using panel data from 1991 to 2007, we find that increase in institutional development which is measured by the ratio of domestic credit to private sector to GDP has significant and sizeable effect on inflation. This paper finds that in countries with high inflation rates, financial sectors cannot resist current levels of inflation and banking system does not decrease inflation in the environment where private banks and financial companies have adapted to existing monetary environment.
KeywordsInflationCreditInstitutionsQuality
- Alchian, A. (1965) Some Economics of Property Rights. Il Polit, 30, 816-829.
- North, D. (1981) Structure and Change in Economic History. W.W. Norton, New York.
- Acemoglu, D., Johnson, S. and Robinson, J. (2005) Institutions as the Fundamental Cause of Long-Run Growth. In: Aghion, P. and Durlauf, S., Eds., Handbook of Economic Growth, Vol. 1A, North Holland, Amsterdam, 385-472. http://dx.doi.org/10.1016/S1574-0684(05)01006-3
- Durham, J.B. (1999) Economic Growth and Political Regimes. Journal of Economic Growth, 4, 81-111. http://dx.doi.org/10.1023/A:1009830709488
- Barro, R.J. (1991) Economic Growth in a Cross-Section of Countries. Quarterly Journal of Economics, 106, 407-443. http://dx.doi.org/10.2307/2937943
- Barro, R.J. and Sala-i-Martin, X. (2004) Economic Growth. 2nd Edition, MIT, Cambridge.
- Torstensson, J. (1994) Property Rights and Economic Growth: An Empirical Study. Kyklos, 47, 231-427. http://dx.doi.org/10.1111/j.1467-6435.1994.tb02257.x
- Zijlstra, J. (1975) Inflation and Its Impact on Society. De Economist, 123, 495-506. http://dx.doi.org/10.1111/j.1467-6435.1994.tb02257.x
- Campillo M. and Miron, J. (1997) Why Does Inflation Differ across Countries? In: Reducing Inflation: Motivation and Strategy, University of Chicago Press, Chicago, 335-362.
- Romer, D. (1993) Openness and Inflation: Theory and Evidence. The Quarterly Journal of Economics, 108, 869-903. http://dx.doi.org/10.2307/2118453
- Cukierman, A. (1992) Central Bank Strategy, Credibility, and Independence. MIT Press, Cambridge.
- Aisen, A. and Veiga, F. (2008) Political Instability and Inflation Volatility. Public Choice, 135, 207-223. http://dx.doi.org/10.1007/s11127-007-9254-x
- King, R.G. and Levine, R. (1993) Finance and Growth: Schumpeter Might Be Right. Quarterly Journal of Economics, 108, 717-737. http://dx.doi.org/10.2307/2118406
- Levine, R. and Zervos, S.J. (1993) What Have We Learned about Policy and Growth from Cross Country Regressions? American Economic Review, 83, 426-430.
- Friedman, M. (1956) The Quantity Theory of Money—A Restatement. In: Friedman, M., Ed., Studies in the Quantity Theory of Money, University of Chicago Press, Chicago, 1-21.
- Alan, G. (2004) Risk and Uncertainty in Monetary Policy. The American Economic Review, 94; Proceedings of the One Hundred Sixteenth Annual Meeting of the American Economic Association, San Diego, 3-5 January 2004, 33-40.