Polish Stabilization: What Can We Learn From the I (2) Cointegration Analysis

Ekaterina Vostroknutova

No ECO2003/06, Economics Working Papers from European University Institute

Abstract: This paper is part of a larger project that questions the common notion of similarity in the Polish and Russian stabilization programs, which clearly brought about different results. It investigates an array of nominal systems for the Polish economy, of domestic price level, import prices, exchange rates, money stock, nominal wages, and real output, and conducts I(1) and I(2) cointegration analyses. Post-stabilization monthly data are used, 1991:5-1999:12. A test for the presence of a price-wage spiral is performed, and the stabilization package is compared to its realization. The long-run homogeneity hypothesis, the impact of monetary and incomes policies, and of external sector variables on long and medium run price development are studied. It is found that in Poland, contrary to some earlier studies, the external sector is not important for the long run price development. On the contrary, very strong evidence is found of the cost-push inflation. These results are very different from the Russian rience, where inflation has had mostly monetary roots. The paper concludes with a comparative policy analysis.

Keywords: cointegration; monetary policy; incomes policy (search for similar items in EconPapers)
JEL-codes: C32 E63 E64 (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-tra
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eui:euiwps:eco2003/06

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