No 1-2/2009

No. 1-2/2009*

CONTENTS

FOREWORD

INFLATION IN THE BALTIC COUNTRIES

Introduction
Brief overview of inflation developments in the Baltic countries
Factors affecting inflation in the Baltic countries
Convergence Demand factors Supply factors
Empirical Phillips curve models for Estonia, Latvia and Lithuania
Data and empirical methodology
Inflation expectations in the Baltic countries: consumer survey-based results
Consumer survey data on inflation expectations in the Baltic countries
Quantifying inflation expectations using the Carlson-Parkin approach
VAR model with inflation expectations
Results of the VAR models
Contributions of inflation expectations shocks
Conclusions
References
Annexes
Annex 1. Supplement on mark-ups in Estonia and Latvia
Annex 2. Perceived inflation and inflation expectations in the Baltic countries
Annex 3. Products not included in the core inflation basket
Annex 4. Electricity and gas prices for households in 2007
Annex 5. Questions 5 and 6 of consumer survey
Annex 6. Distribution of responses in the Baltic countries
Annex 7. VAR impulse response functions
APPENDIX

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