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Economic Growth Determinants for European Regions: Is Central and Eastern Europe Different?

Listed author(s):
  • Jesús Crespo Cuaresma

    ()

    (Vienna University of Economics and Business, Institute for Fiscal and Monetary Policy)

  • Gernot Doppelhofer

    ()

    (Norwegian School of Economics and Business Administration)

  • Martin Feldkircher

    ()

    (Oesterreichische Nationalbank, Foreign Research Division)

We evaluate the monetary determinants of inflation in the Czech Republic, Hungary, Poland and Slovakia by using the McCallum rule for money supply. The deviation of actual money growth from the rule is included in the estimation of Phillips curves for the four economies by Bayesian model averaging. We find that money provides information about price developments over a horizon of ten quarters ahead, albeit the estimates are in most cases rather imprecise. Moreover, the effect of excessive monetary growth on inflation is mixed: It is positive for Poland and Slovakia, but negative for the Czech Republic and Hungary. Nevertheless, these results suggest that money does provide information about future inflation and that a McCallum rule could potentially be used in the future as an additional indicator of the monetary policy stance once the precision of the estimation improves with more data available.

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File URL: https://www.oenb.at/dam/jcr:5ef5413d-9b71-4aa7-93af-9cfbc6892c79/feei_2009_q3_studies_crespo_tcm16-141352.pdf
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Article provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Focus on European Economic Integration.

Volume (Year): (2009)
Issue (Month): 3 ()
Pages: 22-37

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Handle: RePEc:onb:oenbfi:y:2009:i:3:b:2
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  1. Jesús Crespo Cuaresma & Martin Feldkircher, 2013. "Spatial Filtering, Model Uncertainty And The Speed Of Income Convergence In Europe," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(4), pages 720-741, 06.
  2. Roberto Basile, 2008. "Regional economic growth in Europe: A semiparametric spatial dependence approach," Papers in Regional Science, Wiley Blackwell, vol. 87(4), pages 527-544, November.
  3. Mikael Lindahl & Alan B. Krueger, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December.
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  5. Crespo Cuaresma, Jesus & Doppelhofer, Gernot, 2007. "Nonlinearities in cross-country growth regressions: A Bayesian Averaging of Thresholds (BAT) approach," Journal of Macroeconomics, Elsevier, vol. 29(3), pages 541-554, September.
  6. James Lesage & Manfred Fischer, 2008. "Spatial Growth Regressions: Model Specification, Estimation and Interpretation," Spatial Economic Analysis, Taylor & Francis Journals, vol. 3(3), pages 275-304.
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  8. Pfaffermayr, Michael, 2009. "Conditional [beta]- and [sigma]-convergence in space: A maximum likelihood approach," Regional Science and Urban Economics, Elsevier, vol. 39(1), pages 63-78, January.
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  15. Jérôme Vandenbussche & Philippe Aghion & Costas Meghir, 2004. "Growth, distance to frontier and composition of human capital," IFS Working Papers W04/31, Institute for Fiscal Studies.
  16. Jesús Crespo Cuaresma & Gernot Doppelhofer & Martin Feldkircher, 2014. "The Determinants of Economic Growth in European Regions," Regional Studies, Taylor & Francis Journals, vol. 48(1), pages 44-67, January.
  17. Jérôme Vandenbussche & Philippe Aghion & Costas Meghir, 2006. "Growth, distance to frontier and composition of human capital," Journal of Economic Growth, Springer, vol. 11(2), pages 97-127, June.
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  19. Michele Boldrin & Fabio Canova, 2001. "Inequality and convergence in Europe's regions: reconsidering European regional policies," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 205-253, 04.
  20. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-251, April.
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