The End of Moderate Inflation in Three Transition Economies?

Josef Brada and Ali Kutan

No 433, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: This paper examines the moderation of inflation in three transition economies, the Czech Republic, Hungary and Poland at the end of the 1990s. We argue that the institutions for the conduct of monetary policy in these countries were relatively weak and that monetary policy was unsupported by fiscal policy and hampered by multiple objectives. Using a VAR model of inflation, we show that, under a variety of assumptions, foreign prices and the persistence of inflation were the key determinants of inflation in these countries. From this finding we conclude that the moderation of inflation in the Czech Republic, Hungary and Poland was due largely to the decline in import prices from 1997 on, and thus it is likely be a temporary phenomenon.

Keywords: monetary and fiscal policy; transition economies; moderate inflation and inflation targeting (search for similar items in EconPapers)
JEL-codes: E5 P2 (search for similar items in EconPapers)
Pages: pages
Date: 2002-01-01
New Economics Papers: this item is included in nep-tra
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: The end of moderate inflation in three transition economies? (1999)
Working Paper: The End of Moderate Inflation in Three Transition Economies? (1999)
Working Paper: The end of moderate inflation in three transition economies? (1999)
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