This paper analyses the impact of trade openness on inflation in a strategic framework characterized by monopolistic production in the domestic sector and unionized labour markets. By stressing the interplay between internal and external sources of economic distortion, we show that the economy's...

This paper analyses the impact of trade openness on inflation in a strategic framework characterized by monopolistic production in the domestic sector and unionized labour markets. By stressing the interplay between internal and external sources of economic distortion, we show that the economy's...

What can account for the different contemporaneous inflation experiences of various countries, and of the same country over time? We present an analysis of the determination of inflation from a political economy perspective. We document a positive correlation between income inequality and...

Why is it that inflation is persistently high in some periods and persistently low in other periods? We argue that lack of commitment in monetary policy may bear a large part of the blame. We show that, in a standard equilibrium model, absence of commitment leads to multiple equilibria, or...

This paper examines the moderation of inflation in three transition economies, the Czech Republic, Hungary and Poland at the end of the 1990s. We argue that the institutions for the conduct of monetary policy in these countries were relatively weak and that monetary policy was unsupported by...

It is commonly supposed in public and academic discourse that inflation and big government are related. We show that economic theory delivers such a prediction only in special cases. As an empirical matter, inflation is significantly positively related to the size of government mainly when...

Following the Asian financial crisis in 1997-98, a number of Asian central banks adopted inflation targeting. While it is possible for the average inflation rate to be close to target, deviations of inflation could nevertheless be large and protracted. We therefore explore how successful this...

The notions of instrument, intermediate target and final target are defined in the context of the cointegrated VAR. A target variable is said to be controllable if it can be made stationary around a desired target value by using the instrument. This can be expressed as a condition on the...

This paper studies the impact of inflation targeting on the evolution of inflation persistence and the effects of aggregation across expenditure categories. For this purpose we use disaggregate quarterly data on 12 major subcategories of the Korean CPI. We compare persistence in a sample...

The reforms in the Polish banking system began in year 1989. The objective was to adjust the financial system to the market economy. At the beginning the functions of the National Bank of Poland (NBP) were redefined. Ten commercial banks were derived from the NBP structures and the NBP itself...