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Observations on disinflation in transition economies

  • Wachtel, Paul

    ()

    (New York University)

  • Korhonen, Iikka

    ()

    (BOFIT)

The transition economies were remarkably successful in curbing the inflation that took place after the initial transition and shocks and, more recently, most of the countries have brought inflation down to the levels found in major developed countries. In this paper we review the experiences and show how fiscal discipline, monetary policy and exchange rate policy contributed to the outcome. In addition, we note that the influence of EU accession on institutions and policy may have played an important role. The paper also surveys the literature on the quality of the inflation data, the extent to which necessary relative price adjustments have occurred and the size of the Balassa-Samuelson effect. Case studies of disinflation in four countries are presented: Poland, Romania, Estonia and Russia.

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File URL: http://www.suomenpankki.fi/bofit_en/tutkimus/tutkimusjulkaisut/dp/Documents/dp0504.pdf
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Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 5/2004.

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Length: 55 pages
Date of creation: 19 Apr 2004
Date of revision:
Handle: RePEc:hhs:bofitp:2004_005
Contact details of provider: Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
Phone: + 358 10 831 2268
Fax: + 358 10 831 2294
Web page: http://www.suomenpankki.fi/bofit_en/
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  1. Paula De Masi & Vincent Koen, 1997. "Prices in Transition; Ten Stylized Facts," IMF Working Papers 97/158, International Monetary Fund.
  2. Filer, Randall K. & Hanousek, Jan, 2003. "Inflationary bias in middle to late transition Czech Republic," Economic Systems, Elsevier, vol. 27(4), pages 367-376, December.
  3. Balázs Égert, 2003. "Nominal and Real Convergence in Estonia: The Balassa-Samuelson (dis)connection," William Davidson Institute Working Papers Series 556, William Davidson Institute at the University of Michigan.
  4. Nouriel Roubini & Paul Wachtel, 1998. "Current Account Sustainability in Transition Economies," NBER Working Papers 6468, National Bureau of Economic Research, Inc.
  5. Nina Budina & Sweder Van Wijnbergen, 2001. "Fiscal deficits, monetary reform and inflation stabilization in romania," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 4(3), pages 165-194.
  6. Josef C. Brada & Ali M. Kutan, 1999. "The end of moderate inflation in three transition economies?," Working Papers 1999-003, Federal Reserve Bank of St. Louis.
  7. Peter Keller & Thomas J. Richardson, 2003. "Nominal Anchors in the CIS," IMF Working Papers 03/179, International Monetary Fund.
  8. Coricelli, Fabrizio & Jazbec, Bostjan, 2004. "Real exchange rate dynamics in transition economies," Structural Change and Economic Dynamics, Elsevier, vol. 15(1), pages 83-100, March.
  9. Philipp C. Rother, 2000. "Inflation in Albania," IMF Working Papers 00/207, International Monetary Fund.
  10. Erica L. Groshen & Mark E. Schweitzer, 1997. "Inflation goals: guidance from the labor market?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 3(Dec).
  11. Arratibel, Olga & Rodriguez-Palenzuela, Diego & Thimann, Christian, 2002. "Inflation dynamics and dual inflation in accession countries: a 'New Keynesian' perspective," Working Paper Series 0132, European Central Bank.
  12. International Monetary Fund, 2001. "Interpreting Real Exchange Rate Movements in Transition Countries," IMF Working Papers 01/56, International Monetary Fund.
  13. Ratna Sahay & Stanley Fischer & Carlos A. Végh Gramont, 1998. "From Transition to Market; Evidence and Growth Prospects," IMF Working Papers 98/52, International Monetary Fund.
  14. Randall K. Filer & Jan Hanousek, 2003. "Inflationary Bias in Mid to Late Transition Czech Republic," Development and Comp Systems 0306001, EconWPA.
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