Post Stabilization Inflation Dynamics in Slovenia

Kevin Ross

No 1998/027, IMF Working Papers from International Monetary Fund

Abstract: This paper investigates the inflation process in Slovenia through an examination of some commonly used determinants of inflation in transition economies. Granger causality tests and an analysis of unrestricted VAR models suggest a strong linkage between both growth in broader monetary aggregates and changes in the tolar–deutsche mark exchange rate on retail price inflation. While the growth in wages affects inflation, it appears that both changes in the exchange rate and growth in monetary aggregates provide the initial impulse. A discussion of the present money–exchange rate policy framework and its influence on inflation is also provided.

Keywords: WP; RPI inflation; nominal exchange rate; exchange rate; retail price index; Inflation inertia; unrestricted VARs; monetary policy; inflation dynamics; inflation block; inflation process; inflation transmission process; inflation growth; Inflation; Wages; Exchange rates; Monetary aggregates; Monetary base; Western Europe (search for similar items in EconPapers)
Pages: 29
Date: 1998-03-01
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Citations: View citations in EconPapers (4)

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