Inflation drivers in new EU members
This paper focuses on the determinants of inflation for new European Union members during the period from 1996 to 2011. Detecting the drivers of inflation can be essential in designing structural reforms aimed at complementing the main objectives of monetary policy pursued in these countries. We utilize a structural vector error correction model to estimate long run relationships between inflation, mark-up and economic activity incorporating structural factors such as openness of the economy and production and analyse dynamic properties of the models. We find that half of the countries can be characterized by cost-push inflation and the rest by demand side factors. An appropriate monetary strategy to control inflation should accompany ECB monetary strategy in countries belonging to the euro area. The strategy should also maintain a credible currency peg in Lithuania, Latvia and Bulgaria and meet inflation targets in inflation targeting countries in addition with appropriate structural adjustments in labour markets and production capacity.
|Date of creation:||Dec 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Imricha Karvasa 1, 813 25 Bratislava|
Phone: ++421/2/5787 1111
Fax: ++421/2/6787 1100
Web page: http://www.nbs.sk/en/publications-issued-by-the-nbs/working-papers
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Balázs Égert, 2010.
"Catching-up and Inflation in Europe: Balassa-Samuelson, Engel's Law and Other Culprits,"
OECD Economics Department Working Papers
792, OECD Publishing.
- Égert, Balázs, 2011. "Catching-up and inflation in Europe: Balassa-Samuelson, Engel's Law and other culprits," Economic Systems, Elsevier, vol. 35(2), pages 208-229, June.
- Balazs Egert, 2010. "Catching-up and Inflation in Europe: Balassa-Samuelson, Engel's Law and other Culprits," CESifo Working Paper Series 3110, CESifo Group Munich.
- Balazs Egert, 2010. "Catching-up and inflation in Europe: Balassa-Samuelson, Engel’s Law and other Culprits," William Davidson Institute Working Papers Series wp991, William Davidson Institute at the University of Michigan.
- Anindya Banerjee & Lynne Cockerell & Bill Russell, 2000.
"An I(2) Analysis of Inflation and the Markup,"
Dundee Discussion Papers in Economics
120, Economic Studies, University of Dundee.
- Melisso Boschi & Alessandro Girardi, 2005.
"Euro Area inflation: long-run determinants and short-run dynamics,"
ISAE Working Papers
60, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
- Melisso Boschi & Alessandro Girardi, 2007. "Euro area inflation: long-run determinants and short-run dynamics," Applied Financial Economics, Taylor & Francis Journals, vol. 17(1), pages 9-24.
- R. Golinelli & R. Orsi, 2001. "Hungary and Poland," Working Papers 424, Dipartimento Scienze Economiche, Universita' di Bologna.
- Catao, Luis A.V. & Terrones, Marco E., 2005.
"Fiscal deficits and inflation,"
Journal of Monetary Economics,
Elsevier, vol. 52(3), pages 529-554, April.
- Brüggemann, Ralf & Lütkepohl, Helmut, 2000.
"Lag selection in subset VAR models with an application to a US monetary system,"
SFB 373 Discussion Papers
2000,37, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Ralf Brueggemann & Helmut Leutkepohl, 2000. "Lag Selection in Subset VAR Models with an Application to a U.S. Monetary System," Econometric Society World Congress 2000 Contributed Papers 0821, Econometric Society.
- Niels Haldrup, 1998. "An Econometric Analysis of I(2) Variables," Journal of Economic Surveys, Wiley Blackwell, vol. 12(5), pages 595-650, December.
- Binder, Michael & Pesaran, M Hashem, 1999. "Stochastic Growth Models and Their Econometric Implications," Journal of Economic Growth, Springer, vol. 4(2), pages 139-83, June.
- Binder, M. & Pesaran, M.H., 1996. "Stochastic Growth," Cambridge Working Papers in Economics 9615, Faculty of Economics, University of Cambridge.
- Lütkepohl, Helmut & Saikkonen, Pentti & Trenkler, Carsten, 2000.
"Maximum eigenvalue versus trace tests for the cointegrating rank of a VAR process,"
SFB 373 Discussion Papers
2000,83, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Helmut Lütkepohl & Pentti Saikkonen & Carsten Trenkler, 2001. "Maximum eigenvalue versus trace tests for the cointegrating rank of a VAR process," Econometrics Journal, Royal Economic Society, vol. 4(2), pages 8.
- Boschi, Melisso & Girardi, Alessandro, 2005. "Does one monetary policy fit all? the determinants of inflation in EMU countries," MPRA Paper 28554, University Library of Munich, Germany.
- Mark J. Holmes & Theodore Panagiotidis & Abhijit Sharma, 2007.
"The sustainability of India’S current account,"
Discussion Paper Series
2007_05, Department of Economics, University of Macedonia, revised Dec 2007.
- Marco Terrones & Luis CatÃ£o, 2001. "Fiscal Deficits and Inflation; A New Look at the Emerging Market Evidence," IMF Working Papers 01/74, International Monetary Fund.
- Anindya Banerjee & Bill Russell, 2002. "A Markup Model for Forecasting Inflation for the Euro," Dundee Discussion Papers in Economics 129, Economic Studies, University of Dundee.
- Aisen, Ari & Veiga, Francisco Jose, 2006.
"Does Political Instability Lead to Higher Inflation? A Panel Data Analysis,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 38(5), pages 1379-1389, August.
- Ari Aisen & Francisco JosÃ© Veiga, 2005. "Does Political Instability Lead to Higher Inflation? A Panel Data Analysis," IMF Working Papers 05/49, International Monetary Fund.
- Kim, Byung-Yeon, 2001. "Determinants of inflation in Poland : A structural cointegration approach," BOFIT Discussion Papers 16/2001, Bank of Finland, Institute for Economies in Transition.
When requesting a correction, please mention this item's handle: RePEc:svk:wpaper:1021. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.