Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83551
Authors: 
Lendvai, Julia
Year of Publication: 
2005
Series/Report no.: 
MNB Occasional Papers 46
Abstract: 
This paper estimates traditional and New Phillips curves for Hungary over the sample period 1995Q1 to 2004Q1. It presents the first structural Phillips curve estimations for a New EU Member State economy. We find that Hungarian inflation dynamics can be reasonably well described by a standard New Hybrid Phillips curve and by its open economy extension specifying imported goods as intermediate production goods. Our estimation results indicate that Hungarian inflation is significantly more inertial than Euro area inflation. Hungarian inflation inertia appears to be the result of pervasive backward looking price setting behaviour, while prices seem to be reset more frequently than in the Euro area. At the same time, Hungarian inflation dynamics is comparable to that of countries characterized by a relatively high average inflation rate.
Subjects: 
New Keynesian Phillips curve
Inflation dynamics
Open economy
JEL: 
E31
E32
Document Type: 
Working Paper

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