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How did structural reform influence inflation in transition economies?

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  • Barlow, David
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    Abstract

    This paper empirically examines the contribution of structural reforms to reducing inflation using a panel data-set of 25 transition economies. Two econometric methodologies are applied. First, the Blundell and Bond (1998) estimator for panel data incorporating lags of the dependent variable. Second, a panel logit estimator is employed to consider the likelihood of achieving low inflation. Results highlight the importance of price and trade liberalization and the reform of credit allocation for reducing inflation, the latter being especially important for bringing inflation below 10%.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0939-3625(09)00057-0
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    Article provided by Elsevier in its journal Economic Systems.

    Volume (Year): 34 (2010)
    Issue (Month): 2 (June)
    Pages: 198-210

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    Handle: RePEc:eee:ecosys:v:34:y:2010:i:2:p:198-210
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    Keywords: Structural reform Inflation Transition Panel data;

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    1. Ratna Sahay & Carlos A. Vegh, 1996. "Inflation and stabilization in transition economies: An analytical interpretation of the evidence," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 1(1), pages 75-108.
    2. Wyplosz, Charles, 2000. "Ten Years of Transformation: Macroeconomic Lessons," CEPR Discussion Papers 2254, C.E.P.R. Discussion Papers.
    3. Roxana Radulescu & David Barlow, 2002. "The relationship between policies and growth in transition countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(3), pages 719-745, November.
    4. Kenneth S. Rogoff, 2003. "Globalization and global disinflation," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 77-112.
    5. Peter Doyle & Peter F. Christoffersen, 1998. "From Inflation to Growth; Eight Years of Transition," IMF Working Papers 98/100, International Monetary Fund.
    6. de Melo, Martha & Denizer, Cevdet & Gelb, Alan, 1996. "Patterns of Transition from Plan to Market," World Bank Economic Review, World Bank Group, vol. 10(3), pages 397-424, September.
    7. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    8. Cukierman, Alex & Miller, Geoffrey P. & Neyapti, Bilin, 2002. "Central bank reform, liberalization and inflation in transition economies--an international perspective," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 237-264, March.
    9. Marta Campillo & Jeffrey A. Miron, 1997. "Why Does Inflation Differ across Countries?," NBER Chapters,in: Reducing Inflation: Motivation and Strategy, pages 335-362 National Bureau of Economic Research, Inc.
    10. S. Fisher & R. Sahay & C. A. Vegh, 1997. "Stabilization and Growth in Transition Economies: The Early Experience," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
    11. William Gruben & Darryl Mcleod, 2004. "The openness-inflation puzzle revisited," Applied Economics Letters, Taylor & Francis Journals, vol. 11(8), pages 465-468.
    12. De Melo, Martha & Denizer, Cevdet, 1997. "Monetary policy during transition : an overview," Policy Research Working Paper Series 1706, The World Bank.
    13. David Romer, 1993. "Openness and Inflation: Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 869-903.
    14. Li, David D., 1998. "Insider control and the soft budget constraint: a simple theory," Economics Letters, Elsevier, vol. 61(3), pages 307-311, December.
    15. Begg, David, 1997. "Monetary Policy during Transition: Progress and Pitfalls in Central and Eastern Europe, 1990-6," Oxford Review of Economic Policy, Oxford University Press, vol. 13(2), pages 33-46, Summer.
    16. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    17. Wojciech S. Maliszewski, 2000. "Central Bank Independence in Transition Economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(3), pages 749-789, November.
    18. Kornai, Janos, 2001. "Hardening the budget constraint: The experience of the post-socialist countries," European Economic Review, Elsevier, vol. 45(9), pages 1573-1599, October.
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    Cited by:

    1. Borek Vašícek, 2011. "Inflation Dynamics and the New Keynesian Phillips Curve in Four Central European Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(5), pages 71-100, September.
    2. Horváth, Roman & Komárek, Luboš & Rozsypal, Filip, 2011. "Does money help predict inflation? An empirical assessment for Central Europe," Economic Systems, Elsevier, vol. 35(4), pages 523-536.
    3. Égert, Balázs, 2011. "Catching-up and inflation in Europe: Balassa-Samuelson, Engel's Law and other culprits," Economic Systems, Elsevier, vol. 35(2), pages 208-229, June.
    4. Pavle Petrovic & Zorica Mladenovic & Aleksandra Nojkovic, 2011. "Inflation Triggers in Transition Economies: Their Evolution and Specific Features," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(5), pages 101-124, September.

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