Origins of Post-COVID-19 Inflation in Central European Countries

Tomáš Šestořád and Natalie Dvorakova ()
Additional contact information
Natalie Dvorakova: Institute of Economic Studies of the Faculty of Social Sciences, Charles University; Prague, Czech Republic

No 2024/36, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: This paper examines the drivers of the post-pandemic surge in inflation in four small open economies: Czechia, Hungary, Poland, and Slovakia. For this purpose, a Bayesian structural vector autoregressive model with sign-zero restrictions and block exogeneity is employed. The results show that both foreign demand and foreign supply shocks have contributed significantly to inflation in the post-2020 period across countries, alongside notable contributions from domestic factors explaining differences among economies. Specifically, supply-side shocks are identified as the primary domestic factor across all countries, whereas domestic demand shocks were much less influential. Exchange rate shocks were pronounced in Hungary only, while monetary policy shocks have had a minimal impact on inflation since 2022 in all the countries considered. Additionally, we provide decompositions of core inflation, highlighting the predominance of domestic factors.

Keywords: Bayesian VAR; extraordinary events; inflation; sign-zero restrictions; small open economies (search for similar items in EconPapers)
JEL-codes: C32 E31 E32 E52 F41 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2024-10, Revised 2024-10
New Economics Papers: this item is included in nep-ban, nep-eec, nep-eur, nep-mon, nep-opm and nep-tra
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ies.fsv.cuni.cz/en/origins-post-covid-19-i ... l-european-countries (application/pdf)

Related works:
Working Paper: Origins of Post-COVID-19 Inflation in Central European Countries (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2024_36

Access Statistics for this paper

More papers in Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Natalie Svarcova ().