Global and Domestic Drivers of Inflation Dynamics in ASEAN: Evidence from Panel Econometric Analysis
DOI:
https://doi.org/10.35891/vz45gs19Keywords:
Inflation, Central Bank Independence, Policy Rate, Global Oil PriceAbstract
Purpose: This study aims to analyze the determinants of inflation in ASEAN countries by integrating institutional, monetary, and external factors into a unified empirical framework. The post-COVID-19 inflation surge and global supply chain disruptions underscore the importance of understanding inflation dynamics in emerging ASEAN economies.
Design/methodology/approach: This study employs a quantitative panel data approach covering the period 2005–2024. Panel data regression analysis was conducted, preceded by Chow, Hausman, and Lagrange Multiplier tests, which identified the Random Effect Model as the most suitable for the analysis.
Findings: The empirical results indicate that both domestic and global factors significantly affect inflation in ASEAN countries. Central bank independence (CBI), exchange rates, policy interest rates, unemployment, and world oil prices have a significant impact on inflation, whereas money supply and global supply chain pressures are not statistically significant.
Practical implications: The findings provide guidance for policymakers in ASEAN to maintain price stability by strengthening central bank independence, enhancing monetary policy credibility, and effectively managing external risks, particularly energy price shocks.
Originality/value: This study contributes to the macroeconomic literature by offering a comprehensive empirical analysis of inflation determinants in ASEAN, highlighting the interplay between domestic macroeconomic fundamentals and global shocks in shaping inflation behavior.
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References
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