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Stagflation in Latvia: How Long, How Far, How Deep?

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  • Alf Vanags

    () (Baltic International Centre for Economic Policy Studies (BICEPS))

  • Morten Hansen

    () (Stockholm School of Economics in Riga (SSE Riga))

Abstract

What a difference a year makes. Our previous report, from June 2007, focussed on overheating of the Latvian economy and rising inflation. Now, some 14 months later, the Latvian economy has entered recession as measured by two consecutive quarters of seasonally adjusted GDP decline. At the same time the latest inflation rate is down from the peak observed in May of this year. Thus the issues to be discussed in this year’s report are somewhat different. In particular we raise five questions – questions we believe should be at the forefront of the economic-political debate in Latvia: 1) Has inflation indeed spiked? 2) Is disinflation (i.e. the rate of decline in inflation) likely to be fast or slow? 3) Why has the Latvian inflation experience been so much worse than elsewhere e.g. the two other Baltic countries? 4) How deep a recession – permitting the use of that concept – will Latvia experience? 5) How long will it take for the economy to recover?

Suggested Citation

  • Alf Vanags & Morten Hansen, 2008. "Stagflation in Latvia: How Long, How Far, How Deep?," SSE Riga/BICEPS Occasional Papers 4, Baltic International Centre for Economic Policy Studies (BICEPS);Stockholm School of Economics in Riga (SSE Riga).
  • Handle: RePEc:bic:opaper:4
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    References listed on IDEAS

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    Cited by:

    1. J. F. Li & Z. X. Lin, 2016. "Social benefit expenditures and stagflation: evidence from the United States," Applied Economics, Taylor & Francis Journals, vol. 48(55), pages 5340-5347, November.
    2. Trond-Arne Borgersen & Roswitha M. King, 2011. "Inflation in Latvia," Eastern European Economics, Taylor & Francis Journals, vol. 49(3), pages 26-53, May.

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