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Moderate Inflation in Poland; A Real Story

Author

Listed:
  • Thierry Pujol
  • Mark E Griffiths

Abstract

Why is moving from moderate to low inflation almost always slow or costly? This paper answers this question, based on the Polish experience. First, reflecting the transition to a market economy, Polish inflation has been marked by significant changes in relative prices. Second, as wage and price indexation takes root, the inflationary effect of shocks to relative prices is magnified. Third, lagging structural reform, including the failure to extend hard budget constraints to all sectors of the economy, makes monetary policy less effective. Reduced money supply growth with structural reform offers the best prospect for moving to low inflation.

Suggested Citation

  • Thierry Pujol & Mark E Griffiths, 1996. "Moderate Inflation in Poland; A Real Story," IMF Working Papers 96/57, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:96/57
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    Cited by:

    1. Philipp Rother, 2002. "Inflation in Albania," Post-Communist Economies, Taylor & Francis Journals, vol. 14(1), pages 85-107.
    2. Koskinen, Juha-Pekka & Koivu, Tuuli & Chowdhury, Abdur, 2004. "Selecting inflation indicators under an inflation targeting regime : evidence from the MCL method," BOFIT Discussion Papers 16/2004, Bank of Finland, Institute for Economies in Transition.
    3. Masso, Jaan & Staehr, Karsten, 2005. "Inflation dynamics and nominal adjustment in the Baltic States," Research in International Business and Finance, Elsevier, vol. 19(2), pages 281-303, June.
    4. Gottschalk, Jan & Moore, David, 1999. "Implementing inflation targeting regimes: The case of Poland," Kiel Working Papers 956, Kiel Institute for the World Economy (IfW).

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