Inflation in a Fully-Euroised Economy: Could Inflation Differentials Threaten Competitiveness?

Author:

Mitrović-Mijatović Marijana1,Ivanović Maja1

Affiliation:

1. Central bank of Montenegro

Abstract

Abstract This paper analyses inflation in Montenegro, a country which uses euro outside the euro area, and investigates the factors which contribute to price differentials in Montenegro relative to the euro area. Furthermore, the paper examines whether changes in the real effective exchange rates, which in Montenegro’s case follow the path of price differentials, may have any influence on country’s competitiveness.

Publisher

Walter de Gruyter GmbH

Subject

Strategy and Management,Economics and Econometrics,Finance

Reference37 articles.

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2. 2. Apostolov, M. and Josevski, D. (2016) Aggregate Demand–Inflation Adjustment Model Applied to Southeast European Economies, Journal of Central Banking Theory and Practice, Vol 5. (1), pp. 141-157.

3. 3. Ayuso, J., De Castro, F. and Ó. Gómez (2004) The Spanish Inflation Differential: A Never-Ending Story, Economic analysis from the European Commission’s Directorate-General for Economic and Financial Affairs, Vol. 1, Issue 12.

4. 4. Balassa, B. (1964) The Purchasing Power Parity Doctrine: A Reappraisal, Journal of Political Economy, Vol. 72 (6), pp. 584–596.

5. 5. Bogetić, Ž., Pejović I. and I. Osorio-Roddarte (2013) Expanding and Diversifying Montenegro’s Exports: A Product Space Analysis, Journal of Central Banking Theory and Practice, Vol. 2(2), pp. 19-34.

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