The econometric results on Vietnam show a much higher degree of persistence in inflation
than in other countries (Table 4, regression 2). In particular, one percentage point of past
inflation is associated with an inflation increase of about 0.87 in the current period in
Vietnam—0.51 percentage points higher than the sample average.4 As a result, and as shown
in Figure 6, the effects of a shock on inflation last much longer in Vietnam compared with
the other emerging Asian economies. This may reflect sluggish adjustment of inflationary
expectations, and/or monetary policy that is more accommodative in Vietnam compared to
the other countries. Neither the nominal interest rate lagged one period, nor lagged growth of
the money supply, have an impact on inflation in either Vietnam or in the other emerging
Asian economies in the sample.