Price Dynamics in Latvia - Experience and Future Prospects

Martins Bitans, Dace Slakota and Ivars Tillers
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Martins Bitans: Bank of Latvia
Dace Slakota: Bank of Latvia

No 2001/01, Working Papers from Latvijas Banka

Abstract: The Latvian experience shows that the central bank's successful monetary policy, together with the government's prudent policies, helps to reduce inflation. Due to Latvia's small size and high degree of openness of its economy, the exchange rate plays a significant role in determining inflation in the country. The Bank of Latvia's interim objective - the stability of the exchange rate - has been the key to achieving and maintaining price stability. In light of the fact that many factors that determine inflation in Latvia are beyond the central bank's control, the pursuit of a strategy based on inflation targeting appears to be difficult.

Keywords: monetary policy; inflation; Phillips curve (search for similar items in EconPapers)
JEL-codes: C13 E31 (search for similar items in EconPapers)
Date: 2001-12-04
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ltv:wpaper:200101

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