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Product Market Competition and Inflation Persistence

Risk Management Post Financial Crisis: A Period of Monetary Easing

ISBN: 978-1-78441-027-8, eISBN: 978-1-78441-026-1

Publication date: 1 October 2014

Abstract

A number of studies have examined the role of typical demand supply factors in explaining inflation. The contribution in this chapter is to investigate the possible role of product market imperfections on inflation and inflation persistence, especially among emerging market economies. Using a backward-looking Phillips curve framework in a dynamic panel framework of 105 countries over the 2008–2011 period, our findings suggest that product market competition, as measured by the World Economic Forum’s measure of goods market imperfections do have a significant impact on inflation persistence. On average, higher competition and efficiency in product markets reduces the inflation persistence effect especially in the MENA region and countries at lower stages of development.

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Acknowledgements

Acknowledgment

The views expressed in this chapter belong solely to the author. Nothing contained in this chapter should be reported as representing IMF policy or the views of the IMF, its Executive Board, member governments, or any other entity mentioned herein.

Citation

Hosny, A.S. (2014), "Product Market Competition and Inflation Persistence", Risk Management Post Financial Crisis: A Period of Monetary Easing (Contemporary Studies in Economic and Financial Analysis, Vol. 96), Emerald Group Publishing Limited, Leeds, pp. 211-219. https://doi.org/10.1108/S1569-375920140000096008

Publisher

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Emerald Group Publishing Limited