Ahmed Taneem Muzaffar

Money supply and inflation dynamics in the Asia-Pacific economies: a time-frequency approach

Abstract: We examine the relationship between money supply growth and inflation in 3 Asian Economies which are India, Malaysia and Japan using a time-frequency approach. The application of a unified multi-scale analysis allows us to provide a continuous assessment of the link between money supply growth and inflation, unlike most of the existing literature studying this relationship. We also employ a bivariate frequency-domain causality test to determine the nature and direction of interdependence between money supply growth and inflation dynamics. Our findings provide a better understanding of their lead-lag linkages and causal relationship in the selected countries of the Asia-Pacific region.

Inflation–growth relationship in selected Asian developing countries: evidence from panel data

We question the empirical foundation of keeping inflation at 5% or below in developing economies. Using System Generalized Method of Moments we investigate the issue in the context of 14 Asian developing countries for the period 1961–2010. We find no robust empirical justification for targeting inflation at such a low level. The inflation threshold for these countries is found around 13% and it may range between 7% and 14% depending on the level of development. The findings suggest that developing countries can gain from moderate levels of inflation and should not be alarmed when inflation crosses the 5% benchmark.

The IMF and the policy of low inflation : a review of Article IV consultations for selected Asian developing countries

Spearheaded by the International Monetary Fund (IMF), there has been a rethinking of macroeconomic policies, in particular with regard to targeting inflation at a very low level in the wake of 2008–2009 global economic crisis. We provide a content analysis of the IMF Staff Reports on Article IV consultation of 12 Asian developing countries during the period 2009–2010 in order to see whether that rethinking has been reflected in the IMF’s advice. The findings of this study reveal that the IMF continues with its prescription of achieving low inflationary environment irrespective of country-specific circumstances.