Inflation Inertia and Inflation Persistence in Romania Using a DSGE Approach

Cristi Spulbar (), Niţoi Mihai () and Cristian Stanciu ()
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Cristian Stanciu: Faculty of Economics and Business Administration University of Craiova Craiova, Romania

Scientific Annals of Economics and Business, 2012, vol. 59, issue 1, 115-124

Abstract: In this study we propose to analyze the monetary policy of the Romanian central bank and to evaluate the inflation inertia and persistence. Thus, we estimate two DSGE models, a simple neokeynesian standard model built around a forward-looking component and in order to offer a more complex perspective we also estimated a DSGE model that captures the inflation inertia. The results show that the prices evolution reflects the difficulties of eliminating the inflation inertia. In Romania, the historic inflation evolution has a major impact on the way the inflation expectations are formed. Even if the inflation decreased at a moderate level, its persistence continues for a long period of time.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:aicuec:v:59:y:2012:i:1:p:115-124:n:8

DOI: 10.2478/v10316-012-0008-7

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