Fighting Inflation in Politically Unstable Regions: Assessing the effects of regional monetary integration

Keywords

Loading...
Thumbnail Image

Issue Date

2017-08-30

Language

fr

Document type

Journal Title

Journal ISSN

Volume Title

Publisher

Title

ISSN

Volume

Issue

Startpage

Endpage

DOI

Abstract

High inflation stagnates economic performance in politically unstable countries. In this study we look into causal mechanisms affecting the commitment of governments to long-run inflationary policies. In specific, we are interested in the potential effects of regional monetary integration on the optimization strategy by national governments. By using a theoretical analytical approach we found that an increase in output due to economic integration does not alter the optimal policy from cooperative to reneging or vise versa. It does, however, amplifies the payoff of following either strategy, making the government more anchored in their original strategy choice. If monetary integration has a moderating effect on the tendency to create inflation, it is more likely to be through norm-setting rather than through a change in incentives. Keywords: Inflationary Policies; Political Monetary Cycle; Political Economy; Monetary Integration; Time-Inconsistency.

Description

Citation

Supervisor

Faculty

Faculteit der Managementwetenschappen