PRODUCER PRICE INDEX AND CONSUMER PRICE INDEX: CAUSALITY IN CENTRAL AND EASTERN EUROPEAN COUNTRIES

• Authors: Khan Khalid , Su Chi-Wei , Tao Ran , Lobonț Oana-Ramona
• Languages of publication: EN

Abstracts

EN

This article uses the bootstrap panel Granger causality to analyse the link between the Producer Price Index (PPI) and Consumer Price Index (CPI) in ten Central and Eastern European (CEE) countries. The result of cross-sectional dependency and slope homogeneity shows that PPI and CPI vary in different countries. However, the result indicates that PPI influences CPI in the sense of Granger causality in five CEE countries; namely, Latvia, Lithuania, Romania, Slovakia and Slovenia. The findings support the moderate inflation model in the significant countries, which explain that PPI is a primary contributing factor of CPI. On the other hand, CPI has a significant impact on the PPI only in Hungary. The results are useful for policy makers of these countries to formulate inflation targeting policies with greater attention towards the PPI.

Keywords

EN

PRICE INDEX; CEE COUNTRIES; GRANGER CAUSALITY

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2018
• Volume: 66
• Issue: 4
• Pages: 367 – 395

Contributors

author

Khan Khalid

• Qilu University of Technology, School of Finance, No. 3501 Daxue Rd, Jinan, Shandong, China

author

Su Chi-Wei

author

Tao Ran

author

Lobonț Oana-Ramona