Soukvisan Khinsamone

Correspondence: Soukvisan Khinsamone, khinsamone@yahoo.com

Hohai University.

pdf (412.88 Kb) | doi: https://doi.org/10.47260/bae/1221

Abstract

This study investigates the relationship among electricity prices, exchange rates, and the Consumer Price Index (CPI) in Lao PDR using the nonlinear autoregressive distributed lag model. It employs time-series data from 1990 to 2023 and applies unit root tests, cointegration analysis, and bound testing to examine both long- and short-run relationships. The empirical results indicate that electricity price increases significantly contribute to inflation, while exchange rate depreciation has a stronger inflationary effect than appreciation. The short-run dynamics further confirm these asymmetric effects, with the CPI responding more strongly to depreciation than to appreciation. Additionally, the error correction term is negative and statistically significant, confirming that deviations from equilibrium gradually adjust over time. These findings highlight the importance of exchange rate stability and electricity price management in controlling inflation in Lao PDR.

Keywords:

  Electricity Prices, Consumer Price Index, NARDL Model, Lao PDR.

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