Assessment of the natural rate of unemployment and capacity utilisation in Latvia
AbstractInflation and its dynamics feature among the most important indicators in the focus of such economic agents as producers, consumers, investors, monetary and fiscal policy makers. Risks of high inflation or deflation enhance the need to profoundly investigate factors and causes of unfavourable inflation dynamics. Optimal capacity utilisation is one of the ways to escape endogenous pressures that increase inflation or cause deflation. This study pursues the aim of assessing short-term relationships between the capacity utilisation rate and inflation in Latvia. The authors have set a target to determine the capacity utilisation rate at which no pressure is exerted upon inflation and to show whether the capacity utilisation rate of the Latvian economy was an underlying factor that caused a rise in inflation after EU accession.
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Bibliographic InfoArticle provided by Baltic International Centre for Economic Policy Studies in its journal Baltic Journal of Economics.
Volume (Year): 9 (2009)
Issue (Month): 2 (December)
NAIRU; NAIRCU; Kalman filter;
Other versions of this item:
- Aleksejs Melihovs & Anna Zasova, 2009. "The Assessment of Natural Rate of Unemployment and Capacity Utilisation in Latvia," Working Papers 2009/02, Latvijas Banka.
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
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