UNDERLYING FACTORS OF PERSISTENT INFLATION IN ROMANIA

30 June 2009


Authors
Author Vasile Dedu
Author Bogdan Andrei Dumitrescu
Page: 38
Abstract

Price stability has become the main focus of the monetary policy of the candidate countries to the European Monetary Union as the best way to ensure nominal convergence and to promote sustainable economic growth. In our analysis of the inflation evolution we have considered the factors causing persistent inflation over the medium and long term. This paper emphasizes the link between the inflation rate and cost-push, demand-pull and imported inflation. The empirical analysis shows that all the variables are statistically significant and correctly signed and the chosen model explains well the persistent factors of inflation in Romania.

Keywords
inflation rate, output gap, cost-push inflation, demand-pull inflation
References
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