Inflation In Vietnam

The inflation rate in Vietnam last month was 27%, reaching the highest level in Asia. Especially for essential items such as gasoline, foodstuffs and clothing items, all prices are rising (for example, grocery prices are up 74%). It seems to be caused by excessive foreign investment and industries with poor skills. Furthermore, since 1993, the open rate has fallen from 58% to 15%, but there is a possibility that it will rise again now. Some of the workers who have made Vietnam escape from poverty are suffering from expensive urban life and they are planning to return to their rural houses.

There are many empirical studies on inflation in Vietnam. Nguyen Thi Thu Hang and Nguyen Duc Thanh proposed a hybrid model of inflationary determinants including structural method and monetary method in a recent study "Macroeconomic Decision Factors in Vietnam's Inflation 2000 - 2010: Evidence and Analysis" developed. And the Employment Vector Error Correction Model (VECM) econometric approach leads to the following result: Unit Root Test: The first step is to check if the data sequence set is stationary. The Dickey-Fuller (ADF) test is used to derive accurate conclusions about the unit root of a variable. Selection of hysteresis in ADF test according to Akaike Information Criterion (AIC) and Schawarz Information Criterion (SIC)

In Vietnam there are many empirical studies on the determinants of inflation. These studies cover different periods. However, most of them were done before 2005. Therefore, this article fills in time lag. In addition, this survey leverages longer periods of time and provides more accurate insight into the problem. Demand-driven inflation starts with every factor that increases total demand. Consumers may spend more, perhaps because interest rates fall, taxes decrease, or simply because consumers are trustworthy. Companies can make more investments in anticipation of future profits. Government may invest more in infrastructure, health, education, and defense. This may also prosper prosperity export.

Next, I would like to talk about inflation, how to measure inflation in this study, and inflation in Vietnam. According to Romer, "Inflation is an increase in the average price of money and services" (2006: 497). Inflation rates are measured in various ways, including consumer price index, producer price index, GDP inflation index etc. CPI and PPI are fixed weight indicators, which means that batches of the same goods and services are analyzed monthly I mean it. At the same time, the GDP inflation index is a variable weight indicator, and in this approach the basket of goods and services to be evaluated depends on the products of a particular quarter (Evelina M. Tainer, 2006). Among these methods, CPI has many advantages in other ways, so it is the most common way to measure global inflation. Therefore, CPI is related by living expenses and operating expenses.