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Title:What Explains Persistent Inflation Differentials Across Transition Economies? PDF Logo
Authors:Hammermann, Felix
Flanagan, Mark
Issue Date:2007
Series/Report no.:Kieler Arbeitspapiere 1373
Abstract:Panel estimates based on 19 transition economies suggests that some central banks may aim at comparatively high inflation rates mainly to make up for, and to perhaps exploit, lagging internal and external liberalization in their economies. Out-of-sample forecasts, based on expected developments in the underlying structure of these economies, and assuming no changes in institutions, suggest that incentives may be diminishing, but not to the point where inflation levels below 5 percent could credibly be announced as targets. Greater economic liberalization would help reduce incentives for higher inflation, and enhancements to central bank independence could help shield these central banks from pressures.
Subjects:inflation
transition economies
panel data
JEL:P24
E58
Document Type:Working Paper
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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