Analysis of Inflation Dynamics in Post-Communist Economies : The Case of Uzbekistan

Davlatov, Elyor and Lentner, Csaba and Sági, Judit (2025) Analysis of Inflation Dynamics in Post-Communist Economies : The Case of Uzbekistan. PUBLIC GOVERNANCE ADMINISTRATION AND FINANCES LAW REVIEW, 10 (2). pp. 1-22. ISSN 2498-6275

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Abstract

This paper seeks to investigate the short-run and long-run relationship between price level and monetary, non-monetary and external factors of inflation in Uzbekistan, from January 2016 to August 2025. The Autoregressive Distributed Lag (ARDL) model is applied to examine the link between money (M), interest rate (R), exchange rate (FX), producer price index (PP), import volume (IM), global food prices and the consumer price index (CPI). The estimates of the bound test found the cointegrating associations among the variables. The alternative Johansen test confirmed the existence of such a long-run relationship. Additionally, M, FX and PP have long-run relationships with the CPI, while the elasticity of the CPI with respect to R and IM is not statistically significant in the long run. The error correction term (ECM) has a value of –0.18, which means that 18% of the deviation is corrected in each month. Moreover, R and FX have a positive and statistically significant effect on the CPI in the short run. Finally, the Toda and Yamamoto causality test established the bidirectional causality between M and the CPI in Uzbekistan.

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