TITLE:
Institutional Quality and Inflation
AUTHORS:
Raufhon Salahodjaev, Sergey Chepel
KEYWORDS:
Inflation; Credit; Institutions; Quality
JOURNAL NAME:
Modern Economy,
Vol.5 No.3,
March
20,
2014
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.