Disinflation and Monetary Policy Arrangements in Romania

24 Pages Posted: 25 May 2006

See all articles by Daniel Daianu

Daniel Daianu

University of Bucharest

Ella Kallai

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Date Written: November 2004

Abstract

Disinflation has been pursued successfully in Romania in recent years. Inflation came down from over 40 per cent in 2001 to 14 per cent in 2003 and is expected to be cca 9.5 per cent in 2004. By 2007 it should come down to around 3%. The benefits of a lowinflation environment are unquestionable, as price stability is the ultimate objective of monetary policy. In addition, low inflation is a pre-condition for EU accession. There only remains the other critical question, namely, what is the proper strategy to achieve the ultimate objective. Different central banks have adopted strategies which place different emphasize on the various pieces of information, or elements of their decision-making process or different aspects of their communication policies. Inflation targeting (IT) is one of those strategies.

Keywords: inflation-targeting, transition economy, EU accession

JEL Classification: E52, F41, P44

Suggested Citation

Daianu, Daniel and Kallai, Ella, Disinflation and Monetary Policy Arrangements in Romania (November 2004). William Davidson Institute Working Paper No. 789, Available at SSRN: https://ssrn.com/abstract=904227 or http://dx.doi.org/10.2139/ssrn.904227

Daniel Daianu (Contact Author)

University of Bucharest ( email )

14 Academiei St.
Bucharest, Bucuresti 70109
Romania

Ella Kallai

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu PO BOX 882
111 21 Prague 1
Czech Republic
+422 24005280 (Phone)
+422 24005185 (Fax)

HOME PAGE: http://www.cerge-ei.cz

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