Is inflation in developing countries driven by low productivity or monetary growth?

- We investigate how monetary and productivity growth affect inflation.
- The analysis is conducted in a two stage approach.
- The non-parametric approach and growth accounting methods are employed in the first stage.
- The second stage uses a system-gmm approach.
- Results indicate that inflation in developing countries is primarily driven by monetary growth.

This paper investigates whether inflation in developing countries is driven by retrogression in productivity or by monetary expansion. Our empirical methodology relies on growth accounting, non-parametric and generalized method of moment techniques. Results indicate that inflation is primarily driven by monetary growth.