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Factors That Contribute To The Formation Of Inflation

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  • OCTAV NEGURITA

Abstract

The policy of targeting the exchange rate is described by a reaction function that correlates the depreciation rate with the difference between internal and external inflation. Inflation in Romania is created, on the costs side, significantly, both by increasing wages faster than productivity, as well as by RON depreciation. Significant disinflation has costs in terms of increasing unemployment rate. As with unemployment, labor productivity contribution, estimates show that the economic restructuring process was not fast enough at least according to the needs of disinflation.

Suggested Citation

  • Octav Negurita, 2011. "Factors That Contribute To The Formation Of Inflation," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 3(3 (Novemb), pages 629-635.
    • Handle: RePEc:shc:jaresh:v:3:y:2011:i:3:p:629-635
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    More about this item

    Keywords

    anti-inflationary policies; inflationary factors; unemployment rate; work productivity.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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