The Connection Between Political Stability and Inflation: Insights from Four South Asian Nations

2023/10/12 by Ummya Salma, Salma, Ummya, Md. Fazlul Huq Khan +1
Economics, Econometrics and Finance · #FOS: Economics and business #Fiscal Policies and Political Economy #Fiscal Policy and Economic Growth #General Economics (econ.GN) #Monetary Policy and Economic Impact

paper · pdf · doi:10.48550/arxiv.2310.08415

openalex publication_date 2023/10/12 · openalex created_date 2023/10/14 · openalex updated_date 2026/07/28

Abstract

This study explores the relationship between political stability and inflation in four South Asian countries, employing panel data spanning from 2001 to 2021. To analyze this relationship, the study utilizes the dynamic ordinary least square (DOLS) and fully modified ordinary least square (FMOLS) methods, which account for cross-sectional dependence and slope homogeneity in panel data analysis. The findings consistently reveal that increased political stability is associated with lower inflation, while reduced political stability is linked to higher inflation.

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