INFLATION MEASUREMENT AND ITS MACROECONOMIC IMPLICATIONS
Abstract
This study analyzes the impact of inflation on the macroeconomics of Uzbekistan based on panel and time series data for 2015–2024. Using VAR (Vector Autoregression) and ARDL (Autoregressive Distributed Lag) methodologies, the channels of inflation impact on GDP growth, investment, consumer demand, real wages, and the foreign trade balance are identified. The results show that a 1 percent increase in inflation reduces GDP growth by 0.31–0.62 percent, and reduces gross investment by 0.44–0.93 percent. The money supply (M2) and the exchange rate are identified as the main inflationary factors. The transition to inflation targeting (2021) is yielding positive results: inflation decreased from 14.5% (2019) to 8.8% (2023). The article concludes with policy recommendations to reduce inflation to 5 percent by 2026.
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