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Inflation Convergence In Central And Eastern European Economies

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  • Alina M. Spiru

    (Lancaster University)

Abstract

In this study, the degree of convergence of inflation rates of Central and East European economies to a variety of measures of European norm inflation is assessed using a range of econometric techniques. These include unit root testing based upon time series and panels of data and – an innovation to the pertinent literature – tests of nonlinear convergence. The results suggest that while convergence can be revealed in a number of cases, there is some sensitivity associated with the testing framework, in particular whether time series or panel methods are used. Furthermore, the inflation convergence performance of the Central and Eastern European countries is conditional on the chosen inflation benchmark, the composition of the panel and the correlations among members. Moreover, by conducting a battery of linearity tests, it is found that nonlinear inflation convergence is virtually ubiquitous for the period that includes the accession of the Central and Eastern European former transition economies into the EU.

Suggested Citation

  • Alina M. Spiru, 2008. "Inflation Convergence In Central And Eastern European Economies," Romanian Economic Business Review, Romanian-American University, vol. 3(4), pages 14-34, Winter.
    • Handle: RePEc:rau:journl:v:3:y:2008:i:4:p:14-34
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    References listed on IDEAS

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    3. Aycan HEPSAG, 2017. "Inflation convergence among the next eleven economies: Evidence from asymmetric nonlinear unit root test," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(613), W), pages 43-52, Winter.
    4. Juan Carlos Cuestas & Luis A. Gil-Alana & Karl Taylor, 2012. "Inflation convergence in Central and Eastern Europe with a view to adopting the euro," Working Papers 12-01, Asociación Española de Economía y Finanzas Internacionales.

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