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Inflation persistence in Belgium

Author

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  • M. Collin

    (National Bank of Belgium, Research Department)

Abstract

The article deals with inflation dynamics in Belgium, and in particular the degree of inflation persistence. It also presents a historical perspective in order to determine whether the statistical properties of the inflation process have changed over time. The analysis revealed significant changes in inflation dynamics over the past thirty years. First, inflation fell sharply in the mid 1980s, and this downward movement was common to all components of the national consumer price index, except services, where the decline in inflation was much more gradual. Next, the analysis showed that, under the current monetary policy regime, the degree of aggregate inflation persistence is relatively modest. The results also showed that the degree of persistence has diminished somewhat over time, presumably because of changes in the wage formation process. Finally, the study showed that the present findings are broadly similar to those recorded in the euro area, which suggests that the Eurosystem’s monetary policy is appropriate to the Belgian economy.

Suggested Citation

  • M. Collin, 2006. "Inflation persistence in Belgium," Economic Review, National Bank of Belgium, issue ii, pages 23-33, September.
    • Handle: RePEc:nbb:ecrart:y:2006:m:september:i:ii:p:23-33
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    File URL: https://www.nbb.be/en/articles/inflation-persistence-belgium
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    References listed on IDEAS

    as
    1. Maarten Dossche & Gerdie Everaert, 2005. "Measuring Inflation Persistence: A Structural Time Series Approach," Computing in Economics and Finance 2005 459, Society for Computational Economics.
    2. Lünnemann, Patrick & Mathä, Thomas Y., 2004. "How persistent is disaggregate inflation? An analysis across EU 15 countries and HICP sub-indices," Working Paper Series 415, European Central Bank.
    3. Bilke, Laurent, 2005. "Break in the mean and persistence of inflation: a sectoral analysis of French CPI," Working Paper Series 463, European Central Bank.
    4. Corvoisier, Sandrine & Mojon, Benoît, 2005. "Breaks in the mean of inflation: how they happen and what to do with them," Working Paper Series 451, European Central Bank.
    5. Perron, Pierre, 1990. "Testing for a Unit Root in a Time Series with a Changing Mean," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(2), pages 153-162, April.
    6. Bilke, L., 2005. "Break in the Mean and Persistence of Inflation: a Sectoral Analysis of French CPI," Working papers 122, Banque de France.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Fuss, Catherine & Wintr, Ladislav & Du Caju, Philip, 2007. "Downward wage rigidity for different workers and firms: an evaluation for Belgium using the IWFP procedure," Working Paper Series 840, European Central Bank.

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    More about this item

    Keywords

    inflation; inflation persistence; monetary policy;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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