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Inflation Dynamics in Mongolia: Understanding the Roller Coaster
Author:
Julia Bersch
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,
Mr. Steven A Barnett
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Mr. Yasuhisa Ojima
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Series:
IMF Working Papers
Volume/Issue:
Volume 2012: Issue 192
Language:
English
Publication Date:
01 Jul 2012
DOI:
https://doi.org/10.5089/9781475505412.001
ISBN:
9781475505412
ISSN:
1018-5941
Pages:
21
Keywords:
WP; price; food price inflation; supply shock; Mongolia; Inflation; underlying inflation; inflation expectation; food inflation; inflationary spiral; inflation in Mongolia; inflation dynamics; Food prices; Consumer price indexes; Supply shocks; Price controls; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Inflation in Mongolia resembles a roller coaster ride with sharp rises and steep drops. Understanding why is critical for formulating and assessing monetary policy. Food prices are found to be a key driver of inflation, and, not surprising given Mongolia’s geography, are determined primarily by local supply conditions, highly seasonal, and subject to large but short-lived shocks (usually weather related). Nonetheless, demand factors are also found to be significant in explaining price movements and empirical evidence suggests that a 10 percent increase in government wages, for example, would push up underlying inflation by 1 percentage point. So, while inflation will remain volatile due to agricultural shocks, there is space for macroeconomic stabilization policy to help reduce inflation volatility.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund