We analyze the determinants of the inflation trends in ten Southeast European (SEE) countries. Global cost …-related factors and euro area (EA) inflation developments play an important role in explaining inflation dynamics in SEE countries … exchange to euro area market appear to be susceptible to inflation spillovers from the euro area. Moreover, nominal effective …

feature is that we depart from rational expectations while maintaining full rationality of agents in a sense made very precise …. Our first contribution is to show that small departures from rational expectations imply that inflation upon exit can be …