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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Analysing Inflation in Developing Countries: An Econometric Study with Application to Kenya
Authors:Ryan, T.C.I.
Milne, W.J.
Periodical:Journal of Development Studies
Geographic term:Kenya
income distribution
Economics and Trade
External link:https://doi.org/10.1080/00220389408422351
Abstract:This paper demonstrates an approach to modelling the inflation rate in developing countries through the use of the annualized monthly inflation rate in an attempt to distinguish between once-and-for-all increases in the price level and a generally rising price level. The empirical results show that this approach is useful in allowing both monetary and institutional variables to play a role in determining the inflation rate. In addition, the authors estimate the inflation rate for three different income groups in Nairobi, Kenya, and show the changing determinants of the inflation rate across these groups. The estimates are based on monthly data over the period from 1976 through the end of 1990. As expected, the authors found that the lower income group inflation rate is adversely affected by changes in price controlled items while the upper income group inflation rates are not. Also, the upper income income group inflation rate is more sensitive to exchange rate depreciations compared to the lower or middle income group inflation rate. The results of the analysis allow for a discussion of feasible policy interventions which can lead to reductions in the inflation rate with due concern to real income distribution effects. App., bibliogr., notes, ref., sum.