The gold price – Inflation relation in the case of Vietnam: empirical investigation in the presence of structural breaks

Purpose This paper investigates the relationship between domestic gold prices and inflation in Vietnam based on monthly series of price index consumer over period December 2001–July 2020. Design/methodology/approach The co-integration is examined within autoregressive distributed lag-error correction (ARDL bounds testing) framework. also applies vector error model (VECM) impulse response function analysis to explore causal these two variables. Moreover, since both are likely have structural changes time, a unit root test controlling for significant breaks employed this paper. Findings from ARDL testing suggest presence underlying VECM indicates that shocks lead negative long run. In short term, only fluctuations impact inflation, causality unidirectional. Research limitations/implications Gold regarded as critical financial asset preserve wealth pressure case Vietnam. These findings propose implications investors policymakers. Originality/value Empirical results has long-term Vietnamese market. existence permanent inflationary shock, respond negatively shock; hence, can act good hedge against