Forces Driving Inflation in the New EU10 Members
March 1, 2009
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Summary
The paper analyzes the forces driving inflation in the new EU10 member countries. A significant part of headline inflation in these countries is due to common factors, such as price level convergence and EU integration. However, idiosyncratic factors have also played a role in the inflation process. These factors are related to the country-specific financial conditions, pass-through from foreign prices, and demand-supply situation in each country, although administered price adjustments and increases of indirect taxes associated with EU accession are also likely to have played a role.
Subject: Energy prices, Exchange rate arrangements, Financial services, Foreign exchange, Inflation, Nominal effective exchange rate, Prices, Real interest rates
Keywords: Energy prices, Exchange rate arrangements, food inflation, generalized dynamic factor model, Global, inflation, inflation dynamics, inflation expectation, inflation in the NMS, Maastricht inflation criterion, NMS country, NMS policy, NMS relative, Nominal effective exchange rate, price convergence, price level, Real interest rates, WP
Pages:
18
Volume:
2009
DOI:
Issue:
051
Series:
Working Paper No. 2009/051
Stock No:
WPIEA2009051
ISBN:
9781451871999
ISSN:
1018-5941
