• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing:  ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2018 Vol.9(2): 84-87 ISSN: 2010-023X
DOI: 10.18178/ijtef.2018.9.2.593

The Drivers of Inflation in a Small Open European Economy: The Case of Romania

Raluca-Elena Pop and Bogdan Murarașu
Abstract—This paper uses a Bayesian VAR model to quantify the contribution of domestic and global shocks in driving inflation in Romania in the period after the adoption of the inflation targeting monetary policy regime, with a particular focus on the low inflation period that characterized the recent years. The results suggest that both domestic and global shocks have played important roles in shaping the dynamics of inflation. However, in the context of the increasingly significant presence of global value chains in the local market and the higher contribution from imported goods to covering domestic consumption, the low inflation rates observed since the mid-2013 seem to be to a larger extent driven by global factors.

Index Terms—Bayesian vector autoregression, inflation dynamics, shock identification.

Raluca-Elena Pop is with the Bucharest University of Economic Studies, Economic Cybernetics and Statistics Doctoral School, Bucharest, Romania (e-mail: pop_ralucaelena@yahoo.com).
Bogdan Murarașu is with the Bucharest University of Economic Studies, Money and Banking Department, Bucharest, Romania (e-mail: bogdan.murarasu@fin.ase.ro).

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Cite: Raluca-Elena Pop and Bogdan Murarașu, "The Drivers of Inflation in a Small Open European Economy: The Case of Romania," International Journal of Trade, Economics and Finance vol.9, no.2, pp. 84-87, 2018.

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