Modeling Inflation in Poland: A Structural Cointegration Approach

This paper uses cointegration and error-correction models to analyze the relative effects of the monetary, labor, and external sectors on Polish inflation from 1990 to 1999. We use a structural system approach in which cointegration relations are used to derive deviations from steady-state levels. T...

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Bibliographic Details
Published inEastern European economics Vol. 46; no. 6; pp. 60 - 69
Main Author Kim, Byung-Yeon
Format Journal Article
LanguageEnglish
Published Abingdon Routledge 01.11.2008
M. E. Sharpe
M.E. Sharpe, Inc
Taylor & Francis Ltd
SeriesEastern European Economics
Subjects
Appreciation
Cointegration analysis
Economic impact
Economic inflation
Economic models
Economic theory
Economic transitions
Excess demand
Exchange rates
Inflation
Inflation rates
Real output
Real wages
Steady state economies
Studies
Transitional economies
Poland
Eastern Europe
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Summary:This paper uses cointegration and error-correction models to analyze the relative effects of the monetary, labor, and external sectors on Polish inflation from 1990 to 1999. We use a structural system approach in which cointegration relations are used to derive deviations from steady-state levels. The results suggest that the labor and external sectors dominated the determination of Polish inflation during the above period, but their effects on inflation changed in the mid-1990s. During the period 1995-99, the appreciation of the domestic currency contributed to reducing inflation, whereas excessive wage increases prevented inflation from decreasing to a lower level.
ISSN:0012-8775
1557-9298
DOI:10.2753/EEE0012-8775460603