THE RELATIONSHIP BETWEEN INFLATION AND THE MAIN MACROECONOMIC VARIABLES IN ROMANIA

Ionuţ Cristian Baciu
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Ionuţ Cristian Baciu: Alexandru Ioan Cuza University, Iaşi

Network Intelligence Studies, 2014, issue 4, 161-172

Abstract: The inflation is considered an important economic phenomenon that adversely affects the economy of a state. The purpose of this study is to highlight the significant statistical connections between the inflation rate and the main macroeconomic variables influencing the inflationary phenomenon (money supply, the monthly net average nominal wage, exchange rate, reference interest rate), depending on the monetary policy strategy adopted by the National Bank of Romania. The research is conducted using monthly data for the period June 1997 – December 2013, with the explorative method of Principal Components Analysis. The results indicate the fact that for the period June 1997 – July 2005, the inflation rate is strongly correlated with the growth rate of monthly net average nominal wage, while for the period after the adoption of the direct targeting regime in August 2005, it is observed a strong link between the inflation rate and the reference interest rate.

Keywords: Principal component analysis; Inflation rate; Reference interest rate; Price stability (search for similar items in EconPapers)
JEL-codes: C10 E31 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cmj:networ:y:2014:i:4:p:161-172

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