hrcak mascot   Srce   HID

Preliminary communication

Modelling Inflation in Croatia

Maruška Vizek
Tanja Broz

Fulltext: english, pdf (313 KB) pages 5-21 downloads: 584* cite
APA 6th Edition
Vizek, M. & Broz, T. (2007). Modelling Inflation in Croatia. Radni materijali EIZ-a, (3), 5-21. Retrieved from
MLA 8th Edition
Vizek, Maruška and Tanja Broz. "Modelling Inflation in Croatia." Radni materijali EIZ-a, vol. , no. 3, 2007, pp. 5-21. Accessed 24 Sep. 2021.
Chicago 17th Edition
Vizek, Maruška and Tanja Broz. "Modelling Inflation in Croatia." Radni materijali EIZ-a , no. 3 (2007): 5-21.
Vizek, M., and Broz, T. (2007). 'Modelling Inflation in Croatia', Radni materijali EIZ-a, (3), pp. 5-21. Available at: (Accessed 24 September 2021)
Vizek M, Broz T. Modelling Inflation in Croatia. Radni materijali EIZ-a [Internet]. 2007 [cited 2021 September 24];(3):5-21. Available from:
M. Vizek and T. Broz, "Modelling Inflation in Croatia", Radni materijali EIZ-a, vol., no. 3, pp. 5-21, 2007. [Online]. Available: [Accessed: 24 September 2021]

The aim of this paper is to construct a quarterly inflation model for Croatia. In order to model inflation dynamics we use the general-to-specific approach. The advantage of this approach is its ability to deliver results based on underlying economic theories of inflation, which are also consistent with the properties of the data. A two step procedure is followed. In the first step, the long-run sectoral analysis of inflation sources is conducted, yielding long-run determinants of inflation (mark-up, excess money, nominal effective exchange rate and the output gap). In the second step, we estimate an equilibrium error correction model of inflation deploying, among other variables of interest, long-run solutions derived in the first step. The derived model of inflation suggests that mark-up and excess money relationships are very important for explaining the short-run behaviour of inflation, as well as the output gap and nominal effective exchange rate, import prices, interest rates and narrow money. Comparing the results of the model suggests that short-run inflation is more responsive to supply side and exchange rate changes than to monetary conditions.

inflation modelling; cointegration; general-to-specific; Croatia

Hrčak ID: 71593



Visits: 1.097 *