Wozniak evaluates how much relative price shifts inflation. Appreciation of the real exchange rate lowered affected inflation in Poland between 1989 and 1997. He it. uses a theoretical model that predicts a positive Administered price increases -In utilities and other relationship between variance and skewness in the sectors controlled by the governmentdominated distribution of relative price changes and the general inflation from 1989-97. And the adjustment of miany inflation rate. controlled prices is not yet complete. Ideally, future Regressions controlling for various shocks revealed administered increases should be frequent and moderate that significant relative price changesespecially the to prevent the large price shifts that increase inflation. large administered price increases associated withBut because frequent price increases are likely to be adjustmentproduced substantial upward inflationary politically unpopular, sizable increases may be in order pressures.so that the current undervaluation of numerous services Growth in money and wages were shown to fuel will diminish more quickly.This papera product of the Office of the Director, Eastern Europe and Central Asia Regionis part of a larger effort in the region to disseminate the findings on the economic transformation in former socialist countries. Copies of the paper are available free from the World Bank,
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.
Terms of use:
Documents in
AbstractIn this paper we investigate the effects of EU enlargement on price convergence. The internal market is expected to boost integration and increase efficiency and welfare through a convergence of prices in product markets. Two principal drivers are crucial to explain price developments. On the one hand, higher competition exerts a downward pressure on prices because of lower mark ups. On the other hand, the catching up process of low income countries leads to a rise in the price levels and higher inflation over a transition period. Using comparative price levels for 41 product categories price convergence can be established. However, the speed of convergence is rather slow, with half lives around 10 years. The enlargement has slightly stimulated convergence towards the mean price, and this impact is robust across different groups of countries.Moreover, the driving forces of convergence are explored. In line with theoretical predictions, the rise in competition exerts a downward pressure on prices, while catching up of low income countries leads to a rise in price levels and higher inflation. The findings have important implications, as price convergence facilitates the working of common economic policies.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.