Post Stabilization Inflation Dynamics in Slovenia

ByKevin Ross

March 1, 1998

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates the inflation process in Slovenia through an examination of some commonly used determinants of inflation in transition economies. Granger causality tests and an analysis of unrestricted VAR models suggest a strong linkage between both growth in broader monetary aggregates and changes in the tolar–deutsche mark exchange rate on retail price inflation. While the growth in wages affects inflation, it appears that both changes in the exchange rate and growth in monetary aggregates provide the initial impulse. A discussion of the present money–exchange rate policy framework and its influence on inflation is also provided.

Subject: Exchange rates, Foreign exchange, Inflation, Labor, Monetary aggregates, Monetary base, Money, Prices, Wages

Keywords: exchange rate, Exchange rates, Inflation, inflation block, inflation dynamics, inflation growth, Inflation inertia, inflation process, inflation transmission process, Monetary aggregates, Monetary base, monetary policy, nominal exchange rate, retail price index, RPI inflation, unrestricted VARs, Wages, Western Europe, WP

Pages:
29
Volume:
1998
DOI:
https://doi.org/10.5089/9781451844498.001
Issue:
027
Series:
Working Paper No. 1998/027
Stock No:
WPIEA0271998
ISBN:
9781451844498
ISSN:
1018-5941

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