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Identifying Determinants of German Inflation: An Eclectic Approach

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  • Tatiana Fic

Abstract

The paper applies an equilibrium correction model to discuss impacts of monetary, labour and external factors on the German inflation. The approach presented is of eclectic character and allows for examination which variables representative for various inflation theories matter empirically when analysing inflation processes in Germany. The results obtained suggest that inflation in Germany is determined by adjustment processes on the market of production factors, external shocks embodied in import prices, level of capacity utilisation and monetary policy actions.

Suggested Citation

  • Tatiana Fic, 2003. "Identifying Determinants of German Inflation: An Eclectic Approach," Discussion Papers of DIW Berlin 334, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp334
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.40218.de/dp334.pdf
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    Keywords

    equilibrium correction model; inflation modelling; Germany;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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