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Author: Mr.Bogdan Lissovolik
Publisher: International Monetary Fund
ISBN: 1451854927
Category : Business & Economics
Languages : en
Pages : 37
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Book Description
This paper examines determinants of inflation in Ukraine during 1993-2002 in a cointegrating framework. Two basic theoretical models-a markup and a money market model-are tested. While broad money is cointegrated with the CPI for the whole sample and for early subsamples, the cointegration ceases to be statistically significant between 1996-2002, in part because of strong remonetization. The mark-up model offers a more consistent and well-fitting overall framework for 1996-2002 data, pointing inter alia to a greater role of administered prices in the CPI within a fairly mainstream inflation process. The "long-term" monetary transmission mechanism operates through the exchange rate and wages, but broad money clearly enters short-term inflation determinants. Prudent macroeconomic policies, grain harvests, and administrative decisions explain the sharp decline of inflation over 2000-2002.
Author: Mr.Bogdan Lissovolik
Publisher: International Monetary Fund
ISBN: 1451854927
Category : Business & Economics
Languages : en
Pages : 37
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Book Description
This paper examines determinants of inflation in Ukraine during 1993-2002 in a cointegrating framework. Two basic theoretical models-a markup and a money market model-are tested. While broad money is cointegrated with the CPI for the whole sample and for early subsamples, the cointegration ceases to be statistically significant between 1996-2002, in part because of strong remonetization. The mark-up model offers a more consistent and well-fitting overall framework for 1996-2002 data, pointing inter alia to a greater role of administered prices in the CPI within a fairly mainstream inflation process. The "long-term" monetary transmission mechanism operates through the exchange rate and wages, but broad money clearly enters short-term inflation determinants. Prudent macroeconomic policies, grain harvests, and administrative decisions explain the sharp decline of inflation over 2000-2002.
Author: Mr.Carlo Cottarelli
Publisher: International Monetary Fund
ISBN: 1451844018
Category : Business & Economics
Languages : en
Pages : 30
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Book Description
This paper explains inflation performance in a sample of industrial and transition economies by looking at policymakers’ incentives to inflate the economy, and the perceived costs of disinflation. It finds a significant effect of fiscal deficits on inflation, particularly (but not exclusively) in countries where the government securities market is not well developed. Other factors with significant effect on inflation include relative price changes, central bank independence, the exchange rate regime, and the degree of price liberalization; there is only limited evidence that other structural factors, such as those influencing the natural rate of unemployment, have a significant effect on inflation.
Author: Mr.Stanley Fischer
Publisher: International Monetary Fund
ISBN: 1451980043
Category : Business & Economics
Languages : en
Pages : 32
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Book Description
This paper analyzes the growth and stabilization experience in 26 transition economies in eastern Europe, the former Soviet Union, and Mongolia for the period 1989-1994. Inflation rates have declined significantly in most countries following an inflation stabilization program. Growth resumes after stabilization occurs, typically with a lag of about two years. Reducing inflation thus appears to be a precondition for growth. An econometric analysis of the short-run determinants of inflation and growth illustrates the key roles of fixed exchange rates, improved fiscal balances, and structural reforms in spurring growth and lowering inflation, and confirms that inflation stabilization programs have been beneficial for growth even after controlling for structural reforms.
Author: Mr.Carlo Cottarelli
Publisher: International Monetary Fund
ISBN: 9781557756992
Category : Business & Economics
Languages : en
Pages : 300
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Book Description
Many countries, including several transition economies, have in the last few years recorded a sharp decline in inflation, but have been unable to bring inflation down to lower single digits or to achieve price stability. In these countries, inflation has stabilized at moderate levels, with further progress becoming seemingly more difficult. What are the problems created by moderate inflation? What is the appropriate speed of disinflation? These and other issues related to disinflation in transition economies are taken up in this book, edited by Carlo Cottarelli and Gyorgy Szapáry.
Author: Ms.Sharmini Coorey
Publisher: International Monetary Fund
ISBN: 1451930062
Category : Business & Economics
Languages : en
Pages : 98
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Book Description
In light of the persistence of moderate inflation in many transition economies, this paper analyzes whether inflation resulted from insufficiently tight financial policies and wage pressures or from the protracted adjustment of relative prices. Using a new database for 21 countries, the effect of relative price variability on inflation is estimated within a framework controlling for nominal and real shocks. Money and wage growth were the most important determinants of inflation; relative price variability had a sizable effect at high inflation during initial liberalization and a small effect at moderate inflation. Cost recovery may contribute to variability, particularly in the advanced stages of the transition.
Author: Ilker Domaç
Publisher: World Bank Publications
ISBN:
Category : Budget deficits
Languages : en
Pages : 43
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Book Description
June 1998 This study of inflation in Albania yields several conclusions: * Fighting inflation and keeping exports competitive requires cuts in the budget deficit and credit to government. * The strong seasonal inflation can be somewhat ameliorated by improving infrastructure and customs services. * Structural reforms and improved infrastructure should be part of all stabilization programs, because growth reduces inflation. Domac and Elbirt investigate the behavior and determinants of inflation in Albania, using three approaches. They * Decompose inflation into four components: seasonal, cyclical, trend, and random. * Rely on the widely used Granger causality test, using disaggregated data on both the consumer price index (CPI) and key economic variables. * Apply cointegration and error-correction techniques to the process of inflation, using a simple theoretical model. Using the first approach, they conclude that inflation exhibits strong seasonal patterns associated with agriculture seasonality. Peaks and troughs of monetary aggregates correspond to those of inflation, with a two-month lag. The exchange rate also exhibits stable seasonality, reaching its trough in August and tending to depreciate early in the year. The Granger causality test shows M1 (currency in circulation plus demand deposits) and the exchange rate to have predictive content for most items of the CPI. The empirical findings also indicate that credit to government is a good predictor of medical care, transportation, and communication prices. But causality also runs from the prices of bread and cereals, recreation, education, and culture to credit to government, since these items, at least during the period under consideration, are subsidized and contribute to the budget deficit. And causality runs from credit to government to the price of nontradables, highlighting the fact that an increase in the fiscal deficit would undermine Albania's competitiveness by producing appreciation in the real exchange rate. The results of cointegration and error-correction techniques confirm that, in the long run, inflation is positively related to both money supply and the exchange rate, and negatively related to real income. A 1-percent increase in M1, for example, will raise inflation by 0.41 percent; a 1-percent depreciation of the exchange rate will increase inflation by 0.17 percent; whereas a 1-percent increase in real income will reduce inflation by 0.25 percent. Inflation adjusts to its equilibrium value fairly rapidly-25 percent a month. The impact of the exchange rate on inflation occurs a month later, while the impact of real income and money take place two and four months later, respectively. The findings support the conventional elements of a typical stabilization program. Fighting inflation and keeping exports competitive requires reducing both the budget deficit and credit to government. The strong seasonal nature of inflation can be somewhat ameliorated by improving infrastructure and customs services. Structural reforms and improvements in infrastructure should be part of any stabilization program because economic growth is an antidote to inflation. This paper-a joint product of the Albania/Croatia Country Unit, Europe and Central Asia Region, and the Poverty Reduction and Economic Management Sector Unit, East Asia and Pacific Region-is part of a larger effort in the Bank to enhance the knowledge on the inflationary process and its practical implications. The authors may be contacted at
[email protected] or
[email protected].
Author: Sharmini Coorey
Publisher:
ISBN:
Category :
Languages : en
Pages : 98
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Book Description
In light of the persistence of moderate inflation in many transition economies, this paper analyzes whether inflation resulted from insufficiently tight financial policies and wage pressures or from the protracted adjustment of relative prices. Using a new database for 21 countries, the effect of relative price variability on inflation is estimated within a framework controlling for nominal and real shocks. Money and wage growth were the most important determinants of inflation; relative price variability had a sizable effect at high inflation during initial liberalization and a small effect at moderate inflation. Cost recovery may contribute to variability, particularly in the advanced stages of the transition.
Author:
Publisher: World Bank Publications
ISBN:
Category : Asia
Languages : en
Pages : 60
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Book Description
Author: Ms.Ratna Sahay
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 74
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Book Description
A simple model is developed to understand inflationary pressures and stabilization in nonmarket economies. In light of the model, the paper reviews the inflation and stabilization experiences of several transition economies in Eastern Europe and the former Soviet Union. These experiences are then compared to those of high inflation market economies. The paper concludes that, despite significant differences in the economic structure and institutional framework, the inflation and stabilization experiences in transition and market economies are similar in many respects. In particular, monetary accommodation and lack of fiscal discipline are critical in sustaining inflation, and exchange rate-based anchors seem more successful than money anchors in bringing down inflation. On the other hand, wage policies appear to be more critical in reigning inflation in transition economies than in market economies.
Author: Mr.Ernesto Hernández-Catá
Publisher: International Monetary Fund
ISBN: 1451849850
Category : Business & Economics
Languages : en
Pages : 25
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Book Description
This paper examines the influence of economic liberalization and monetary growth on inflation during the transition from central plan to market. It concludes that price decontrol had a substantial, one-time effect on the price level but no lasting effect on inflation; that economic liberalization broadly defined may have helped dampen price increases; and that monetary expansion has been the fundamental determinant of inflation in the region. The paper also finds that the intensity of liberalization has been related to geographic proximity to market economies, to the size of the underground economy, and to the degree of political freedom.
