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Essays on the effect of inflation volatility and institutions on growth and development
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Text
TitleInfo
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Title
Essays on the effect of inflation volatility and institutions on growth and development
Identifier
ETD_1724
Identifier
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http://hdl.rutgers.edu/1782.2/rucore10001600001.ETD.000051201
Language
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eng
Genre
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theses
Subject
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Topic
Economics
Subject
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(authority = ETD-LCSH)
Topic
Inflation (Finance)
Subject
(ID = SBJ-1);
(authority = ETD-LCSH)
Topic
Economic development
Abstract
The purpose of this dissertation is to analyze empirically and theoretically the impact of the decrease in inflation volatility versus the impact of the improvement in institutions on growth and development. The first chapter of this dissertation estimates the effects of inflation and inflation volatility on economic growth in the presence of different degrees of legal and financial institutions. The main contribution of this chapter is to show that while the level of inflation does not have a significant effect on growth, which is in line with previous studies; inflation volatility does significantly impact growth even for countries with moderately high levels on inflation. In addition, improving either legal or financial institutions has a statistically significant positive impact on growth and helps to reduce the negative impact of inflation volatility on growth.
The second chapter analyzes the channel through which inflation volatility and financial institutions affect a country's ability to borrow on international capital markets; which affects their ability to invest and therefore grow. The findings of this chapter show that reducing inflation volatility or improving financial institutions will significantly improve a country's sovereign debt rating leading to a drop in its cost of borrowing, which is to be quantified. One important contribution of this chapter is to show that it is inflation volatility that is important in determining a country's sovereign debt rating rather than the level of inflation which has been argued in the literature.
The welfare implications of the decrease in inflation volatility versus the improvement in institutions are quantified in chapter three. This chapter analyzes a micro-foundation based small open economy model that is used to help fully understand the dynamics of a decrease in inflation volatility and an improvement in institutions for a developing economy. The study finds that the welfare effect of improving institutions and of reducing inflation volatility is large with the largest effect being caused by an improvement in financial institutions. One policy implication of these results is that developing economies can get larger welfare gains from improving their institutions than from reducing inflation volatility.
The second chapter analyzes the channel through which inflation volatility and financial institutions affect a country's ability to borrow on international capital markets; which affects their ability to invest and therefore grow. The findings of this chapter show that reducing inflation volatility or improving financial institutions will significantly improve a country's sovereign debt rating leading to a drop in its cost of borrowing, which is to be quantified. One important contribution of this chapter is to show that it is inflation volatility that is important in determining a country's sovereign debt rating rather than the level of inflation which has been argued in the literature.
The welfare implications of the decrease in inflation volatility versus the improvement in institutions are quantified in chapter three. This chapter analyzes a micro-foundation based small open economy model that is used to help fully understand the dynamics of a decrease in inflation volatility and an improvement in institutions for a developing economy. The study finds that the welfare effect of improving institutions and of reducing inflation volatility is large with the largest effect being caused by an improvement in financial institutions. One policy implication of these results is that developing economies can get larger welfare gains from improving their institutions than from reducing inflation volatility.
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electronic resource
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xv, 189 p. : ill.
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Note
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Ph.D.
Note
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Includes bibliographical references (p. 177-188)
Note
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by Noha Emara
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Emara
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Noha
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1974
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Noha Emara
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Ira
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chair
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Ira Gang
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Landon-Lane
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John
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John Landon-Lane
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Bordo
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Michael
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Michael Bordo
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Vos
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Rob
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Rob Vos
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Rutgers University
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Graduate School - New Brunswick
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2009
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2009-05
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xx
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Rutgers University Electronic Theses and Dissertations
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ETD
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Graduate School - New Brunswick Electronic Theses and Dissertations
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Identifier
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doi:10.7282/T3R211NX
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ETD doctoral
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The author owns the copyright to this work.
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Open
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Author Agreement License
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I hereby grant to the Rutgers University Libraries and to my school the non-exclusive right to archive, reproduce and distribute my thesis or dissertation, in whole or in part, and/or my abstract, in whole or in part, in and from an electronic format, subject to the release date subsequently stipulated in this submittal form and approved by my school. I represent and stipulate that the thesis or dissertation and its abstract are my original work, that they do not infringe or violate any rights of others, and that I make these grants as the sole owner of the rights to my thesis or dissertation and its abstract. I represent that I have obtained written permissions, when necessary, from the owner(s) of each third party copyrighted matter to be included in my thesis or dissertation and will supply copies of such upon request by my school. I acknowledge that RU ETD and my school will not distribute my thesis or dissertation or its abstract if, in their reasonable judgment, they believe all such rights have not been secured. I acknowledge that I retain ownership rights to the copyright of my work. I also retain the right to use all or part of this thesis or dissertation in future works, such as articles or books.
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