Current Issue
Volume
30
year
2024
Issue
1

Archive

AUTHOR'S GUIDELINES

ABSTRACT GUIDELINES

SUBMIT AN ARTICLE

SCIENTFIC AND RESEARCH PROFILE

PUBLICATION ETHICS

PEER REVIEW POLICY

ABSTRACTING AND INDEXING

EDITORIAL BOARD

INTERNATIONAL EDITORIAL BOARD

PUBLISHER


Economic Alternatives articles are published open access under a Creative Commons CC BY 4.0 user licence

ADDRESS OF THE EDITORIAL OFFICE

ISSN (print): 1312-7462
ISSN (online): 2367-9409
4 issues per year


The conceptions of the authors express their personal opinion and do not engage the editors of the journal.

The Editorial Board is committed to open science and free access to scientific publications.

No Article Processing Charges apply. The Publisher allows for immediate free access to the work and permits any user to read, download, copy, distribute, print, search, or link to the full texts of articles, crawl them for indexing, pass them as data to software, or use them for any other lawful purpose. 

Every manuscript received will be checked for plagiarism.

Typeset by:

UNWE Publishing Complex

Printed by:

UNWE Publishing Complex

Ratchet Effect in Import Prices – Inflation Rate Nexus Economic Alternatives
year
2021
Issue
3

Ratchet Effect in Import Prices – Inflation Rate Nexus

Abstract

This study examined the existence of the ratchet effect in the import price-inflation rate nexus for advanced (high-income) and emerging (middle-income) countries. The study used monthly data from 1980M01 to 2019M07 and compared the potential of the dummy variable-based asymmetric model with that of the Nonlinear Autoregressive Distributed Lag (NARDL) model in modelling the ratchet effect. The result showed that the ratchet effect exists in the import price-inflation rate nexus for high-income and middle-income countries. This suggests that the issue of imported inflation and ratchet effect is country-specific. The significance of the ratchet effect in these countries implies that maintaining a (symmetric) rule-based counter-cyclical monetary policy when dealing with import price shocks would be inefficient, and can make monetary policy harm the economy in the medium to the long term. It is, therefore, recommended that each country should examine the existence or otherwise of ratchet in her import price - inflation rate nexus to determine whether it should adopt a symmetric or an asymmetric rule-based counter-cyclical monetary policy against import price shocks to avoid harming the economy through the implementation of an inefficient monetary policy.

Keywords

Imported inflation, Ratchet effect, Middle income countries, Asymmetric Modelling
Download EA.2021.3.01.pdf