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Cost Push Factors of Bulgarian Inflation

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  • Stella Raleva

Abstract

The paper studies the behavior of nominal and real wages, average labor productivity, the exchange rate of Bulgarian lev against the dollar, and the world price of oil. It examines the specific parameters of their change in the periods of high and moderate inflation, and outlines the peculiarities of their effects on price fluctuations. It is concluded that an increase in wages serves as a booster of inflation in both periods because of their faster growth rates compared to an increase in the average labor productivity. The second major conclusion drawn is that the depreciation of Bulgarian lev against the dollar is also a source of both high and moderate inflation, and its role is particularly important in extremely high inflation episodes and relatively limited in the period after mid-1997. On the other hand changes in oil prices are manifested as a factor of inflation mainly in the second period, although their effect is sporadic and comparatively smaller than the respective contribution of rising wages and decreasing exchange rate.

Suggested Citation

  • Stella Raleva, 2012. "Cost Push Factors of Bulgarian Inflation," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 37-57,58-75.
  • Handle: RePEc:bas:econth:y:2012:i:3:p:37-57,58-75
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    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other

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