Is Poland Ready for Inflation Targeting?

ByPeter F. Christoffersen, Robert F. Westcott

March 1, 1999

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Monetary policymakers in advanced transition economies such as Poland are increasingly interested in how inflation responds to changes in policy instruments and other economic forces. In this paper, measures of underlying CPI inflation based upon optimal trimming concepts are developed. The sensitivity of these CPI measures to changes in a set of 25 policy and economic variables is then studied via Granger causality tests and impulse responses and a multivariate model of CPI inflation developed. The results show that a core set of variables characterize one-period-ahead underlying inflation moderately well but that statistical linkages are not yet robust.

Subject: Consumer price indexes, Inflation, Inflation targeting, Monetary policy, Monetary policy instruments, Price controls, Price indexes, Prices

Keywords: administered prices, Central and Eastern Europe, Consumer price indexes, headline CPI inflation, inflation, inflation concepts, inflation development, inflation dynamics, inflation measure, inflation process, inflation targeting, leading indicators, monetary policy, price, price change, Price controls, Price indexes, private-sector inflation, producer price inflation, robust statistics, underlying inflation pattern, WP

Pages:
31
Volume:
1999
DOI:
https://doi.org/10.5089/9781451846089.001
Issue:
041
Series:
Working Paper No. 1999/041
Stock No:
WPIEA0411999
ISBN:
9781451846089
ISSN:
1018-5941

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