Commodity Price Volatility, Cyclical Fluctuations, and Convergence: What is Ahead for Inflation in Emerging Europe?
21 Pages Posted: 23 Mar 2009
Date Written: March 2009
Abstract
This paper assesses the role of international commodity prices, cyclical fluctuations, and convergence in driving inflation in 18 European emerging economies. Country specific VARs and panel estimates indicate that international commodity price shocks have a significant impact on domestic inflation, but the inflation response is asymmetric for positive and negative shocks. Cyclical fluctuations explain a relative small share of inflation variability, and the inflation response is asymmetric during upturns and downturns. Price convergence is estimated to add nearly 3 percentage points to headline inflation, for the average country whose price level is about 50 percent relative to the EU-15 average.
Keywords: Working Papers
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Divergent Inflation Rates in Emu
By Philip R. Lane and Patrick Honohan
-
Euro Area Inflation Differentials
By Ignazio Angeloni and Michael Ehrmann
-
Regional Inflation in a Currency Union: Fiscal Policy vs. Fundamentals
-
Exchange Rates and Inflation Under Emu: An Update
By Patrick Honohan and Philip R. Lane
-
Exchange Rates and Inflation Under Emu: An Update
By Patrick Honohan and Philip R. Lane
-
Inflation Convergence and Divergence within the European Monetary Union
By Fabio Busetti, Lorenzo Forni, ...
-
Regional Inflation Dynamics within and Across Euro Area Countries and a Comparison with the Us
-
Long-Run Determinants of Inflation Differentials in a Monetary Union
By Filippo Altissimo, Pierpaolo Benigno, ...
-
Long-Run Determinants of Inflation Differentials in a Monetary Union
By Filippo Altissimo, Pierpaolo Benigno, ...