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Sources Of Inflation In Transition Economy: The Case Of Croatia

Author

Listed:
  • Valerija Botrić

    (Institute of Economics, Zagreb)

  • Boris Cota

    (Faculty of Economics and Business, University of Zagreb)

Abstract

The aim of this paper is to study the infl ation generation process in Croatia. Following the estimation strategies of Dibooglu and Kutan (2005.) we estimate a small open economy model, using SVAR estimation approach. The results of the estimated model imply that the infl ation in Croatia is strongly related to the terms of trade and balance of payment shocks. We contrast these results to the reestimated unrestricted VAR model, following the Payne (2002.) estimation strategy. The results of the latter also confirm that monetary shocks have relatively small infl uence on the inflation generation process in Croatia.

Suggested Citation

  • Valerija Botrić & Boris Cota, 2006. "Sources Of Inflation In Transition Economy: The Case Of Croatia," Ekonomski pregled, Hrvatsko društvo ekonomista (Croatian Society of Economists), vol. 57(12), pages 835-854.
    • Handle: RePEc:hde:epregl:v:57:y:2006:i:12:p:835-854
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    References listed on IDEAS

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    1. Dibooglu, Sel & Kutan, Ali M., 2005. "Sources of inflation and output movements in Poland and Hungary: Policy implications for accession to the economic and monetary union," Journal of Macroeconomics, Elsevier, vol. 27(1), pages 107-131, March.
    2. Mr. Carlos A. Végh Gramont & Ms. Ratna Sahay, 1995. "Inflation and Stabilization in Transition Economies: A Comparison with Market Economies," IMF Working Papers 1995/008, International Monetary Fund.
    3. Coenen, Gunter & Levin, Andrew T. & Christoffel, Kai, 2007. "Identifying the influences of nominal and real rigidities in aggregate price-setting behavior," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2439-2466, November.
    4. Payne, James E., 2002. "Inflationary dynamics of a transition economy: the Croatian experience," Journal of Policy Modeling, Elsevier, vol. 24(3), pages 219-230, June.
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    Cited by:

    1. Jakšić Saša, 2022. "Modelling Determinants of Inflation in CESEE Countries: Global Vector Autoregressive Approach," Review of Economic Perspectives, Sciendo, vol. 22(1), pages 137-169, June.
    2. Igor Živko & Mile Bošnjak, 2017. "Time Series Modeling of Inflation and its Volatility in Croatia," Notitia - journal for economic, business and social issues, Notitia Ltd., vol. 1(3), pages 1-10, December.
    3. Jamilov, Rustam, 2012. "Channels of Monetary Transmission in the CIS," MPRA Paper 39568, University Library of Munich, Germany.
    4. Maruška Vizek & Tanja Broz, 2009. "Modeling Inflation in Croatia," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 45(6), pages 87-98, November.
    5. Djula Borozan, 2011. "Granger causality and innovation accounting analysis of the monetary transmission mechanism in Croatia," Post-Communist Economies, Taylor & Francis Journals, vol. 23(4), pages 517-537, May.
    6. Lena Malesevic-Perovic, 2009. "Cointegration Approach to Analysing Inflation in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 33(2), pages 201-218.

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    More about this item

    Keywords

    inflation; Croatia; SVAR;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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