Inflation Dynamics and Monetary Policy Effectiveness in Developing Economies
Keywords:
Inflation, monetary policy, developing economiesAbstract
Inflation control remains a central challenge for monetary authorities in developing economies due to structural rigidities, external shocks, and limited policy transmission mechanisms. This study examines the effectiveness of monetary policy instruments in managing inflation dynamics across selected developing economies. Using panel data from 20 developing countries over the period 2017–2022, the analysis evaluates the relationship between policy interest rates, inflation outcomes, and macroeconomic stability indicators. The empirical findings indicate that monetary policy has a statistically significant but heterogeneous impact on inflation, with effectiveness strongly influenced by institutional quality and financial sector depth. The study offers policy-relevant insights for improving inflation management in developing economies.
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