Inflation dynamics in Vietnam
Master thesis
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http://hdl.handle.net/11250/187293Utgivelsesdato
2011-11-10Metadata
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- Master's theses (HH) [1071]
Sammendrag
Inflation has been a persistence problem in Vietnam and it needs a well-developed practical
model which can capture the important driving forces to analyze inflation dynamics in
Vietnam. Despite the vast research of hybrid New Keynesian Phillips Curve on developed and
developing countries, little is known about the case of Vietnam. This thesis contributes to
literature by investigating the possibility of hybrid New Keynesian Phillips Curve in explaining
inflation dynamics in Vietnam and examining what is the main causes of high inflation in
Vietnam. The output is calculated from the difference between actual GDP and potential GDP
which is de-trended by Hodrick Prescott Filter. The hybrid NKPC is estimated by Generalized
Method of Moments, in which future inflation expectation is examined by actual value. The
findings show that the hybrid New Keynesian Phillips Curve fits Vietnamese data very well.
Inertial inflation and inflation expectations are both important determination of inflation
persistence. The output gap also contributes to the inflation dynamics. The estimation is
extended by include global oil price and global food price and the results supports to the roles
of these two variables in inflation process. The study will contribute to future research on
similar topics.