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Vulnerability of inflation in the new EU Member States to country-specific and global factors

Author

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  • John Beirne

    (Brunel University and European Central Bank)

Abstract

This empirical paper uses a GMM-System panel estimator to assess the vulnerability of inflation in the new EU Member States to country-specific and global factors over the period 1998 to 2007, including an assessment of the more recent 2002 to 2007 period. Using a large dataset of macroeconomic, financial and structural reform indicators, the results suggest that country-specific factors such as exchange rate movements, productivity growth, government consumption expenditure, capital growth, the current account balance, and reforms on price liberalisation have strong effects on inflation. Global factors that have a notable effect include energy prices, and particularly in the more recent period, food prices. Furthermore, inflationary effects of EU accession are apparent in the 2002 to 2007 analysis. The magnitudes of the coefficients suggest that country-specific effects dominate global influences on inflation in the CEEs.

Suggested Citation

  • John Beirne, 2009. "Vulnerability of inflation in the new EU Member States to country-specific and global factors," Economics Bulletin, AccessEcon, vol. 29(2), pages 1420-1431.
    • Handle: RePEc:ebl:ecbull:eb-08p20006
    as

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    References listed on IDEAS

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    More about this item

    JEL classification:

    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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