Solomon Islands research illuminates inflation sources in small islands
Exchange rates appear only to have short-term impact
A working paper published by the Central Bank of Solomon Islands has broken new ground in assessing the factors behind inflation in small island nations.
Determinants of Inflation in the Solomon Islands by Vitarina Takana, Patricia Samani and Kenneth Especkerman-True builds a model based on data from 2003–2012. The researchers examine the impact of changes in the money supply, government spending and the real effective exchange rate on inflation.
They find that in the long run only the money
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