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The impact of exogenous shocks on the dynamics and persistence of inflation: a macroeconomic model-based approach for Greece

Author

Listed:
  • Theodore M. Mitrakos

    () (Bank of Greece)

  • Nicholas G. Zonzilos

    () (Bank of Greece)

Abstract

The paper analyses the dynamic response of inflation to various economic shocks and investigates the sources of inflation persistence through a set of counter factual simulations. Analysis shows that inflation seems to be more persistent in Greece than, on average, in Euro Area. Inflation persistence tends to be higher in response to fiscal shocks than others shocks. Only an indirect tax shock could be classified as “non-persistent” for Greece. Inflation persistence is crucially affected by the degree of competition in product market and it is mainly of intrinsic nature while nominal rigidities and frictions in the labor market do not seem important in explaining the relatively higher persistence of Greek inflation.

Suggested Citation

  • Theodore M. Mitrakos & Nicholas G. Zonzilos, 2006. "The impact of exogenous shocks on the dynamics and persistence of inflation: a macroeconomic model-based approach for Greece," Economic Bulletin, Bank of Greece, issue 26, pages 37-57, January.
  • Handle: RePEc:bog:econbl:y:2006:i:26:p:37-57
    as

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    File URL: https://www.bankofgreece.gr/BogEkdoseis/econbull200601.pdf
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    Cited by:

    1. Costas N. Kanellopoulos, 2012. "The Size and structure of uninsured employment," Economic Bulletin, Bank of Greece, issue 37, pages 23-41, December.
    2. Papaspyrou Theodoros, 2012. "EMU sustainability and the prospects of peripheral economies," Economic Bulletin, Bank of Greece, issue 36, pages 7-29, April.
    3. Hiona Balfoussia & Heather Gibson, 2010. "Inflation and Nominal Uncertainty: the case of Greece," Economic Bulletin, Bank of Greece, issue 33, pages 63-78, May.
    4. Dimitra Dimitropoulou & Anastasia Koutsomanoli-Filippaki & Evangelos Charalambakis & Georgios Aggelis, 2014. "The financing of Greek enterprises before and during the crisis," Economic Bulletin, Bank of Greece, issue 39, pages 7-20, July.
    5. Zacharias Bragoudakis & Stelios Panagiotou, 2010. "Determinants of the receipts from shipping services: the case of Greece," Economic Bulletin, Bank of Greece, issue 34, pages 41-55, September.
    6. Vassilis Th. Rapanoss & Georgia Kaplanoglou, 2010. "Independent Fiscal Councils and Their Possible Role in Greece," Economic Bulletin, Bank of Greece, issue 33, pages 7-20, May.
    7. Petros M Migiakis, 2010. "Determinants of the Greek stock-bond correlation," Economic Bulletin, Bank of Greece, issue 33, pages 79-90, May.
    8. Costas N. Kanellopoulos, 2012. "Employment and worker flows during the financial crisis," Economic Bulletin, Bank of Greece, issue 36, pages 31-41, April.
    9. Costas N. Kanellopoulos, 2014. "The private sector Greek labour market during the crisis," Economic Bulletin, Bank of Greece, issue 39, pages 21-36, July.
    10. Faidon Kalfaoglou, 2012. "Bank capital adequacy framework," Economic Bulletin, Bank of Greece, issue 36, pages 43-81, April.
    11. Theodoros Mitrakos & Panos Tsaklogou & Ioannis Cholezas, 2010. "Determinants of the wage rates in Greece with an emphasis on the wages of tertiary education graduates," Economic Bulletin, Bank of Greece, issue 34, pages 7-40, September.
    12. Theodore Mitrakos & Panos Tsakloglou & Ioannis Cholezas, 2010. "Determining factors of youth unemployment in Greece with emphasis on tertiary education graduates," Economic Bulletin, Bank of Greece, issue 33, pages 21-62, May.
    13. Nikos G. Zonzilos & Zacharias G. Bragoudakis & Georgia I. Pavlou, 2009. "An analysis of the reliability of first (flash) quarterly national account data releases for Greece," Economic Bulletin, Bank of Greece, issue 32, pages 39-51, May.
    14. Zacharias Bragoudakis & Dimitrios Sideris, 2012. "Do retail gasoline prices adjust symmetrically to crude oil price changes? the case of the Greek oil market," Economic Bulletin, Bank of Greece, issue 37, pages 7-21, December.
    15. Daphne Nicolitsas, 2016. "Price Setting Practices In Greece: Evidence From A Small-Scale Firm-Level Survey," Bulletin of Economic Research, Wiley Blackwell, vol. 68(4), pages 367-382, October.
    16. Sophia Lazaretou, 2014. "The smart economy: cultural and creative industries in Greece: can they be a way out of the crisis?," Economic Bulletin, Bank of Greece, issue 39, pages 73-103, July.
    17. Petros M. Migiakis, 2012. "Reviewing the proposals for common bond issuances by the euro-area sovereign under a long-term perspective," Economic Bulletin, Bank of Greece, issue 37, pages 43-54, December.
    18. Theodoros M. Mitrakos & George T. Simigiannis, 2009. "The determinants of Greek household indebtedness and financial stress," Economic Bulletin, Bank of Greece, issue 32, pages 7-26, May.
    19. Christos Papazoglou, 2009. "Is Greece's export performance really low?," Economic Bulletin, Bank of Greece, issue 32, pages 27-37, May.
    20. Aikaterini Chaireti, 2014. "The housing situation of residents of Greece in the time of crisis 2008-2012," Economic Bulletin, Bank of Greece, issue 39, pages 105-141, July.
    21. Faidon Kalfaoglou, 2014. "European banking union: “Europeanising” banks’ financial safety net," Economic Bulletin, Bank of Greece, issue 39, pages 37-72, July.
    22. Heather Gibson & Hiona Balfoussia, 2010. "The impact of nominal and real uncertainty on macroeconomic aggregates in Greece," Economic Bulletin, Bank of Greece, issue 34, pages 57-71, September.

    More about this item

    Keywords

    Inflation persistence; macroeconomic models; impulse response function;

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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