Selecting Inflation Indicators Under an Inflation Targeting Regime: Evidence from the MCL Method

31 Pages Posted: 19 Sep 2007

See all articles by Tuuli Koivu

Tuuli Koivu

Bank of Finland

Juha-Pekka Koskinen

Bank of Finland - Institute for Economies in Transition (BOFIT)

Abdur Chowdhury

Marquette University - Department of Economics; United Nations - Economic Commission for Europe

Date Written: September 1, 2004

Abstract

This paper seeks to fill a gap in the literature by analyzing inflation in Poland, one of only two transition economies that have adopted a strict inflation-targeting policy. The paper also introduces a new method for selecting inflation indicators. Consistent with the earlier literature, empirical results find a strong link between the producer price index and consumer price index in Poland. This shows the importance of the manufacturing sector in determining the price level in the country. Overall, wages, broad money supply and the exchange rate are good indicators of inflation.

Keywords: inflation, Poland, MCL method

Suggested Citation

Koivu, Tuuli and Koskinen, Juha-Pekka and Chowdhury, Abdur, Selecting Inflation Indicators Under an Inflation Targeting Regime: Evidence from the MCL Method (September 1, 2004). BOFIT Discussion Paper No. 16/2004. Available at SSRN: https://ssrn.com/abstract=1015443 or http://dx.doi.org/10.2139/ssrn.1015443

Tuuli Koivu (Contact Author)

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

Juha-Pekka Koskinen

Bank of Finland - Institute for Economies in Transition (BOFIT) ( email )

Helsinki 00101
Finland

Abdur Chowdhury

Marquette University - Department of Economics ( email )

P.O. Box 1881
Milwaukee, WI 53201-1881
United States

United Nations - Economic Commission for Europe ( email )

Palais des Nations
Geneva
Switzerland

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