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John Beirne
''Vulnerability of inflation in the new EU Member States to country-specific and global factors''
( 2009, Vol. 29 No.2 )
This empirical paper uses a GMM-System panel estimator to assess the vulnerability of inflation in the new EU Member States to country-specific and global factors over the period 1998 to 2007, including an assessment of the more recent 2002 to 2007 period. Using a large dataset of macroeconomic, financial and structural reform indicators, the results suggest that country-specific factors such as exchange rate movements, productivity growth, government consumption expenditure, capital growth, the current account balance, and reforms on price liberalisation have strong effects on inflation. Global factors that have a notable effect include energy prices, and particularly in the more recent period, food prices. Furthermore, inflationary effects of EU accession are apparent in the 2002 to 2007 analysis. The magnitudes of the coefficients suggest that country-specific effects dominate global influences on inflation in the CEEs.
JEL: P2 - Socialist Systems and Transitional Economies: General
E3 - Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
Manuscript Received : Dec 16 2008 Manuscript Accepted : Jun 28 2009

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