RESEARCH PAPER
The Pure Inflation Rate in the Polish Economy
 
More details
Hide details
Publish date: 2009-09-30
 
Gospodarka Narodowa 2009;234(9):1–21
KEYWORDS
ABSTRACT
The authors use a restricted factor model to estimate the Harmonized Index of Consumer Prices (HICP) excluding relative price changes. The index obtained in this way, referred to as pure inflation, demonstrates a stronger relationship to the central bank’s short-term interest rate than the HICP index and selected measures of core inflation. Pure inflation also has a forecasting effect on the future HICP, comparable or better than that of competing models. The estimated variable shows that changes in relative prices played a much smaller role in the recent period of rising inflation (2006-2008) than during previous inflation increases (1999-2000 and 2004-2005). This shows that inflation was mainly driven by demand pressures in 2006-2008, the authors conclude.
eISSN:2300-5238
ISSN:0867-0005