Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152566
Authors: 
Arratibel, Olga
Rodriguez-Palenzuela, Diego
Thimann, Christian
Year of Publication: 
2002
Series/Report no.: 
ECB Working Paper 132
Abstract: 
This paper examines inflation dynamics in the current EU-accession countries in central and eastern Europe, focusing particularly on the determinants of 'dual inflation', that is, diverging inflation rates for tradable and non-tradable goods. The paper draws on the recently published data for the Harmonized Index of Consumer Prices (HICP) of the Accession countries and, indeed, finds evidence of ' dual inflation' in these economies. To test empirically for underlying determinants, the paper borrows from the recently developed New Phillips curve literature. Overall, domestic factors have systematically a stronger impact upon non-tradable goods inflation whereas international factors have a stronger impact over tradable goods. Furthermore, the results point to the possibly very different effects of exchange rate regimes over tradable and non-tradable goods inflation. On the whole, the findings suggest that the Balassa-Samuelson effect is not a prominent factor behind the current 'experience' of dual inflation in these countries.
JEL: 
E31
E58
F41
P24
Document Type: 
Working Paper

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