Yemen's Inflation Driven by International Shocks and Domestic Demand
The article analyzes what causes inflation in Yemen. They used three different methods to study this: a single equation model, a Structural Vector Autoregression Model, and a Vector Error Correction Model. The results show that inflation in Yemen is mainly influenced by international price changes, exchange rate fluctuations, domestic demand shifts, and changes in the money supply. Import prices and exchange rate changes have a big impact on inflation. In the short term, international price and exchange rate changes affect inflation the most, while in the medium term, domestic money supply and demand changes play a bigger role.