A cross country analysis of inflation rate among brics nations: A vector error correction model (vecm) approach

It is a world of highly globalized era where various economies are integrating with other economies and making various groups to compete and make self-efficient to survive in such a highly competitive world. In such economic integration there are various macro-economic variables which affect each other. The present study is designed to check the inflation rate of BRICS nations which is a economic integrated group of five emerging economies in the world. The abbreviation BRICS stands form Brazil, Russia, India, China and South Africa. Each country has their own set of policies which affects their inflation rate within the country but as group it also affects other economies. As the result of the study suggested by Vector Error Correction Model (VECM) approach indicates that that there is a long-run causality for inflation rate exist among all BRICS nations but in a short-run if we taking India as a depending variable only the inflation rate of China affecting the inflation rate of India where other economies does not affecting the inflation rate of India. The secondary data is used in the study. The data has been collected for the following study is from International Monetary Fund (IMF) which is a yearly data of Inflation rate, end of period consumer prices (Annual percent change) from 1991 to 2016 of all the BRICS nations individually to analyze the pattern inflation rate and their movement of BRICS countries. The result of Granger causality test is showing causality relationship among BRICS nations for inflation rate. The following research paper also indicates how inflation of one country is cointegrated with each other.