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Inflation dynamics and the New Keynesian Phillips curve in EU-4

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  • Borek Vasícek

    ()
    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

Abstract

The paper seeks to shed light on inflation dynamics of four new EU member states: the Czech Republic, Hungary, Poland and Slovakia. To this end, the New Keynesian Phillips curve augmented for open economies is estimated and additional statistical tests applied. We find the following. (1) The claim of New Keynesians that the real marginal cost is the main inflation-forcing variable is fragile. (2) Inflation seems to be driven by external factors. (3) Although inflation holds a forward- looking component, the backward-looking component is substantial. An intuitive explanation for higher inflation persistence may be rather adaptive than rational price setting of local firms.

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Bibliographic Info

Paper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wpdea0912.

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Length: 37 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:uab:wprdea:wpdea0912

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Keywords: Inflation dynamics; New Keynesian Phillips curve; CEEC; GMM estimation;

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Citations

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Cited by:
  1. Katarína Danišková & Jarko Fidrmuc, 2011. "Inflation Convergence and the New Keynesian, Phillips Curve in the Czech Republic," Working Papers 292, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  2. Vašíček, Bořek, 2012. "Is monetary policy in the new EU member states asymmetric?," Economic Systems, Elsevier, vol. 36(2), pages 235-263.
  3. Jaromir Baxa & Miroslav Plasil & Borek Vasicek, 2012. "Changes in Inflation Dynamics under Inflation Targeting? Evidence from Central European Countries," Working Papers 2012/04, Czech National Bank, Research Department.
  4. Malikane, Christopher, 2013. "A New Keynesian Triangle Phillips Curve," MPRA Paper 43548, University Library of Munich, Germany.
  5. Selen Baser Andic & Hande Kucuk & Fethi Ogunc, 2014. "Inflation Dynamics in Turkey : In Pursuit of a Domestic Cost Measure," Working Papers 1420, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  6. Katarína Danišková & Jarko Fidrmuc, 2012. "Meta-Analysis of the New Keynesian Phillips Curve," Working Papers 314, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).

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