An extension and application of the Cagan inflation model in selected developing ESCAP countries : 1960 - 82

The paper attempts to reformulate the inflation model developed by P. Kagan in order to make it more realistic and suitable for a quantitative analysis of inflation in developing countries. The modified version of this model is tested with annual time series data for eight ESCAP countries (Bangladesh, Pakistan, India, Malaysia, Sri Lanka, Thailand, South Korea and the Philippines). It is found that the nominal money growth variable does not have a significant impact on the rate of inflation in most of the countries and world inflation is one of the major determinants. (DÜI-Sen)