Asian Textile and Apparel Trade: Moving forward with Regional Integration
James, William E. | January 2008
Abstract
This paper empirically examines the relative importance of different sources of inflation in developing Asia. In particular, it tests the widely held view that the region’s current inflation surge is primarily the result of external price shocks such as oil and food shocks. In addition, this paper also estimates the degree of pass-through of external price shocks to domestic prices. Our central empirical result is that contrary to popular misconception, Asia’s inflation is largely due to excess aggregate demand and inflation expectations rather than external price shocks. This suggests monetary policy will remain a powerful tool in the fight against inflation in Asia. Another significant finding is that the pass-through of the external price shocks to domestic prices has been limited so far. However, the removal of government subsidies is likely to lead to greater pass-through in the future. The resulting inflationary pressures provide a further rationale for tightening monetary policy.
Citation
James, William E.. 2008. Asian Textile and Apparel Trade: Moving forward with Regional Integration. © Asian Development Bank. http://hdl.handle.net/11540/1763. License: CC BY 3.0 IGO.ISSN
1655-5252
Keywords
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Exports
Economic development projects
Economic policy
Economic forecasting
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Citable URI
http://hdl.handle.net/11540/1763Metadata
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