Monetary Policy and the Convergence to Low Inflation: A Small Macro Model for Hungary and Poland, 1991-1998

38 Pages Posted: 25 Sep 1999

See all articles by Roberto Golinelli

Roberto Golinelli

University of Bologna - Department of Economics

Riccardo Rovelli

University of Bologna - Department of Economics; IZA Institute of Labor Economics

Date Written: July 30, 1999

Abstract

We estimate two parsimonious structural models for inflation, the output gap, the domestic interest rate and the exchange rate for Hungary and Poland, for the period of "transition" (1991-1998). The empirical analysis shows that, at the aggregate level, the transmission of monetary policy impulses to macro variables may be characterized in a similar fashion to that of advanced open industrial countries. We highlight similarities and differences between the two countries under study and with other industrial countries studied in the recent literature. We draw several conclusions on understanding and modeling the effects of monetary policy, and also on the desirable design of policy rules, during the process of disinflation.

JEL Classification: E17, E52, P24

Suggested Citation

Golinelli, Roberto and Rovelli, Riccardo, Monetary Policy and the Convergence to Low Inflation: A Small Macro Model for Hungary and Poland, 1991-1998 (July 30, 1999). Available at SSRN: https://ssrn.com/abstract=177468 or http://dx.doi.org/10.2139/ssrn.177468

Roberto Golinelli

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 051 209 2638 (Phone)
+39 051 209 2664 (Fax)

Riccardo Rovelli (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 051 2092 601 (Phone)
+39 051 6402 664 (Fax)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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