Confronting the Inflationary Pressures of Introducing the Euro with the Effects of Negative External Shocks

• Autorzy: Petra Popek Biškupec , Ivan Ružić
• Języki publikacji: EN

Abstrakty

EN

Research background: with the introduction of the euro as the domestic currency, economies have faced inflationary pressures caused by price convergence towards higher levels. During the last period of significant negative shocks from the environment, by entering the euro area, the negative effects of the likelihood of inflation caused by the introduction of the euro may be absent. Purpose: the aim of this paper is to prove that inflation caused by joining the euro area will not materialize due to the negative effects of external shocks. Research methodology: A panel analysis with a fixed effects model was conducted for two models. Model 1 represents the countries that introduced the euro before the escalation of the global financial crisis and Model 2 represents the countries that introduced the euro after the development of the global financial crisis. Results: the research confirmed that due to current negative external shocks and rising long-term interest rates in financial markets, the effect of inflation due to the introduction of the euro will be absent among EU members that will adopt the euro as a common currency in the next few years. Novelty: The results of the research contribute to the scientific prediction of business and financial trends. The creators of macroeconomic models and monetary policy can use the results to define measures, instruments and activities more precisely for achieving and maintaining macroeconomic balance. (original abstract)

Słowa kluczowe

EN

Emerging markets; Inflation; Economic recession; Euro; Economic shock

PL

Rynki wschodzące; Inflacja; Recesja gospodarcza; Euro; Szok gospodarczy

• Czasopismo: Folia Oeconomica Stetinensia
• Rocznik: 2023
• Numer: vol. 23, iss. 1
• Strony: 194--207

Twórcy

autor

Petra Popek Biškupec

• University of Applied Sciences, Croatia

autor

Ivan Ružić

• University of Applied Sciences, Croatia

Bibliografia

• Aggarwal, R. (2017). Causality Between Asset Inflation and Commodity Inflation. Pacific Business Review International, 9(12), 93-101. Retrieved from http://www.pbr.co.in/2017/2017_month/June/11.pdf (1.06.2022).
• Aimola, A., Odhiambo, N. (2020). Public Debt and Inflation: A Review of International Literature. Folia Oeconomica Stetinensia, 20(1), 9-24. DOI: 10.2478/foli-2020-0001.
• Ball, L., Mazumder, S. (2020). A Phillips curve for the euro area. ECB Working Paper Series 2354. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2354~9f0fd070ff.en.pdf (3.07.2022).
• Banerjee, R., Mehrotra, A., Zampolli, F. (2020). Inflation at risk from Covid-19. BIS Bulletin 28. Retrieved from https://www.bis.org/publ/bisbull28.htm (3.06.2022).
• Berglöf, E., Korniyenko, Y., Plekhanov, A., Zettelmeyer, J. (2009). Understanding the crisis in emerging Europe. EBRD Working Paper 109. Retrieved from https://www.ebrd.com/downloads/research/economics/workingpapers/wp0109.pdf (26.05.2022).
• Berument, M.H., Yalcinb, Y., Yildirim, J. (2012). Inflation and inflation uncertainty: A dynamic framework. Physica A: Statistical Mechanics and its Applications, 391(20), 4816-4826. DOI: 10.1016/j.physa.2012.05.003.
• Blot, C., Bozou, C., Creel, J. (2022). Inflation expectations in the euro area: trends and policy considerations. European Parliament. Retrieved from https://www.europarl.europa.eu/thinktank/en/document/IPOL_IDA(2022)703341 (3.07.2022).
• Bräuer, L. Rünstler, G. (2020). Monetary policy transmission lover the leverage cycle: evidence for the euro area. ECB Working Paper Series 2421. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2421~57bac9acb0.en.pdf (3.07.2022).
• Camatte, H., Daudin, G., Faubert, V., Lalliard, A., Rifflart, C. (2021). Estimating the elasticity of consumer prices to the exchange rate: an accounting approach. ECB Working Paper Series 2610. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2610~fa5dfb2e8e.en.pdf (26.05.2022).
• Cecchetti, S. (2009). Monetary policy and the measurement of inflation: prices, wages and expectations. BIS Papers 49, 1-11. Retrieved from https://www.bis.org/publ/bppdf/bispap49.htm (13.06.2022).
• Croatian Banking Association (2017). Utjecaj uvođenja eura na inflaciju: Tresla se brda, rodio se miš? Analiza 60. Retrieved from http://hub.dev.perpetuum.hr/sites/default/files/ha60_euroinflacija_final.pdf (3.07.2022).
• De Fiore, F., Goel, T., Igan, I., Moessner, R. (2022). Rising household inflation expectations: what are the communication challenges for central banks? BIS Bulletin 55. Retrieved from https://www.bis.org/publ/bisbull55.htm (7.06.2022).
• European Council (2020, July). Conditions for joining the euro area: convergence criteria. Retrieved from https://www.consilium.europa.eu/en/policies/joining-the-euro-area/convergence-criteria (26.05.2022).
• Feldkircher, M., Siklos, P.L. (2018). Global Inflation Dynamics and Inflation Expectations. International Review of Economics & Finance, 64, 217-241. DOI: 10.1016/j.iref.2019.06.004.
• Fukunda, S. Soma, N. (2019). Inflation Target and Anchor of Inflation Forecasts in Japan. Journal of the Japanese and International Economies, 52, 154-170. DOI: 10.1016/j.jjie.2019.01.002.
• Gupta, R., Makena, P. (2019). Inflation Aversion and the Growth-Inflation Relationship. Annals of Economics and Finance, 20(2), 803-815. Retrieved from https://econpapers.repec.org/article/cufjournl/y_3a2019_3av_3a20_3ai_3a2_3aguptamakena.htm (2.06.2022).
• Hahn, E. (2020). The wage-price pass-through in the euro area: does the growth regime matter? ECB Working Paper Series 2485. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2485~ade2cab91e.en.pdf (3.07.2022).
• Herrmann, S., Winkler, A. (2009). Real convergence, financial markets and the current account Emerging Europe versus emerging Asia. Economic Papers 362. Retrieved from https://ec.europa.eu/economy_finance/publications/pages/publication14285_en.pdf, (26.05.2022).
• Hufner, F., Koske, I. (2008). The Euro Changeover in the Slovak Republic: Implications for Inflation and Interest Rates. OECD Working Papers 632. Retrieved from https://www.oecd.org/economy/surveys/41029725.pdf (3.07.2022).
• Igan, D., Kohlscheen, E., Nodari, G., Rees, D. (2022). Commodity market disruptions, growth and inflation. BIS Bulletin 54. Retrieved from https://www.bis.org/publ/bisbull54.htm (3.06.2022).
• Leiva-Leon, D., Martinez-Martin, J., Ortega, E. (2020). Exchange rate shocks and inflation comovement in the euro area. ECB Working Paper Series 2383. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2383~3b11aea889.en.pdf (3.07.2022).
• Maddala, G.S., Lahiri, K. (2009). Introduction to Econometrics. New Delhi: Wiley.
• Mandeya, S., Ho, S. (2022). Inflation, Inflation Uncertainty and the Economic Growth Nexus: A Review of the Literature. Folia Oeconomica Stetinensia, 22(1), 172-190. DOI: 10.2478/foli-2022-0009.
• Popek Biškupec, P., Herman, S. (2021). Improving the Resilience of Banking System in Small Open Economy: Is Macroprudential Policy Efficient? SHS Web of Conferences, 92(07050). DOI: 10.1051/shsconf/20219207050.
• Pufnik, A. (2017). Učinci uvođenja eura na kretanje potrošačkih cijena i percepcije inflacije: pregled dosadašnjih iskustava i ocjena mogućih učinaka u Hrvatskoj. Privredna kretanja i ekonomska politika, 27(142), 129-159. DOI: 10.15179/pkiep.27.1.4.
• Szyszko, M. (2015). Inflation Forecasts Versus Shaping Inflation Expectations. Comparative Analysis. Comparative Economic Research, 18(4), 139-156. DOI: 10.1515/cer-2015-0033.

Identyfikatory

DOI

10.2478/foli-2023-0010