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Abstract: Is inflation persistence in the new EU Member States (NMS) comparable to that in the euro area countries? We argue that persistence may not be as different between the two country groups as one might expect. We confirm that one should work carefully with the usual estimation methods when analyzing the NMS, given the scope of the convergence process they went through. We show that due to frequent breaks in inflation time series in the NMS, parametric statistical measures assuming a constant mean deliver substantially higher persistence estimates for the NMS than for the euro area countries. Employing time-varying mean leads to the reversal of this result and suggests similar or lower inflation persistence for the NMS compared to euro area countries. Structural measures show that backward-looking behavior may be more important component in explaining inflation dynamics in the NMS than in the euro area countries.
Inflation persistence, new Member States, time-varying mean, New Hybrid Phillips curve
Abstract: This paper employs firm-level panel data from the Czech Republic to investigate the empirical relevance of the learning-by-exporting hypothesis. To provide convincing estimates, one must be able to disentangle learning-by-exporting from changes in company management that induce the company to both start exporting and introduce productivity increasing measures. Therefore, I compare estimates based on matching on propensity score, which do not control for potential management changes, to estimates based on an instrumental variables strategy. Specifically, I focus on firms that start exporting due to changes in the industry-specific exchange rate and industry-specific ratio of producer prices on domestic and foreign markets. The results suggest that learning-by-exporting in the Czech Republic is not significant, either statistically or economically, irrespective of the method used.
exporting, productivity, matching on propensity score, local average treatment effect
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