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Inflation in Poland: How Much Can Globalization Explain?

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  • Céline Allard

Abstract

This paper analyses how globalization has affected inflation in the New EU Members States (NMS), and Poland in particular, since 1995. It finds prices have become less sensitive to domestic economic conditions as trade integration rose, possibly because monetary policy incentives increasingly shifted toward meeting price stability objectives. Quantitatively, globalization appears to have lowered Polish prices by ½ to 1 percentage point annually since 1995, substantially more than in advanced economies. However, future inflation-dampening effects in the NMS are likely to be smaller as the pace of increases in trade openness moderates.

Suggested Citation

  • Céline Allard, 2007. "Inflation in Poland: How Much Can Globalization Explain?," IMF Working Papers 2007/041, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2007/041
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    References listed on IDEAS

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    1. Kenneth S. Rogoff, 2003. "Globalization and global disinflation," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 77-112.
    2. Scott, Andrew & Imbs, Jean & Chen, Natalie, 2004. "Competition, Globalization and the Decline of Inflation," CEPR Discussion Papers 4695, C.E.P.R. Discussion Papers.
    3. David Romer, 1993. "Openness and Inflation: Theory and Evidence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(4), pages 869-903.
    4. Laurence Ball & N. Gregory Mankiw, 1995. "Relative-Price Changes as Aggregate Supply Shocks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(1), pages 161-193.
    5. Assaf Razin, 2004. "Globalization and Disinflation: A Note," NBER Working Papers 10954, National Bureau of Economic Research, Inc.
    6. Shang-Jin Wei & Ms. Irina Tytell, 2004. "Does Financial Globalization Induce Better Macroeconomic Policies?," IMF Working Papers 2004/084, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Emna Trabelsi, 2016. "Transparency on inflation of OECD countries? An Application of LSDVC Estimator on a dynamic Panel Model," Economics Bulletin, AccessEcon, vol. 36(2), pages 1095-1126.
    2. Emna Trabelsi, 2016. "What effects exert Economic Globalization and Central Bank Transparency on inflation of OECD countries? An Application of LSDVC Estimator on a dynamic Panel Model," Working Papers hal-01157387, HAL.
    3. Satti, Saqlain Latif & Shahbaz, Muhammad & Mujahid, Nooreen & Ali, Amjad, 2013. "Impact of Financial Development and Globalization on Inflation: The Role of Remittance and Economic Growth in Bangladesh," MPRA Paper 51675, University Library of Munich, Germany, revised 21 Nov 2013.
    4. Aaron Mehrotra & Tomáš Slacík, 2009. "Evaluating Inflation Determinants with a Money Supply Rule in Four Central and Eastern European EU Member States," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 6-21.
    5. Mukherjee, Deepraj & Kemme, David, 2008. "Evaluating inflation forecast models for Poland: Openness matters, money does not (but its cost does)," MPRA Paper 14952, University Library of Munich, Germany.
    6. Ms. Edda Zoli, 2009. "Commodity Price Volatility, Cyclical Fluctuations, and Convergence: What is Ahead for Inflation in Emerging Europe?," IMF Working Papers 2009/041, International Monetary Fund.
    7. repec:prg:jnlpep:v:preprint:id:640:p:1-18 is not listed on IDEAS
    8. Aleksandra Halka & Grzegorz Szafranski, 2018. "What Common Factors are Driving Inflation in CEE Countries?," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(2), pages 131-148.
    9. repec:zbw:bofitp:2009_018 is not listed on IDEAS
    10. Aaron Mehrotra & Tomáš Slacík, 2009. "Evaluating Inflation Determinants with a Money Supply Rule in Four Central and Eastern European EU Member States," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 6-21.

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    Keywords

    WP; price; trade openness;
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