Modeling the Causes of Inflation in Romania

Constatin Mitruț (), Mihaela Gruiescu () and Roxana Cristina Vîlcu ()
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Constatin Mitruț: The Bucharest Academy of Economic Studies
Mihaela Gruiescu: The Romanian - American University
Roxana Cristina Vîlcu: The Bucharest Academy of Economic Studies

ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, 2017, vol. 51, issue 3, 21-38

Abstract: In this paper, we analyze the main causes of inflation in Romania in the period 2007-2013. Determining the causes of inflation requires a thorough analysis to identify anti-inflationary measures and to assess possible future effects on prices as well. The proposed econometric methods analyze on one hand the impact and the extent to which prices are influenced by monetary factors and production, and by salaries and the exchange rate, on the other hand. We also analyze several models containing the main macroeconomic variables which have a direct impact on inflation and also within these models we find patterns in various economic interdependences. From the six estimated models, only two of them meet the criteria of the VAR method used in our study and the main lessons drawn from data modeling are: the money supply, the index of producer prices and the inflation CORE2 are the main sources of variation in industrial prices; after their own shocks, the monetary factors have a significant impact on prices, primarily on the production prices and later on the industry prices, whereas the salaries and exchange rate have little impact and do not account for the inflation in our country during the investigated period.

Keywords: inflation; salaries; money; foreign exchange; VAR method. (search for similar items in EconPapers)
JEL-codes: C12 C19 E31 E37 (search for similar items in EconPapers)
Date: 2017
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