The Persistence of Moderate Inflation in the Czech Republic

The Co-Editor of Post-Soviet Geography and Economics, an authority on the transition economies of Eastern Europe, joins a Federal Reserve Bank economist in a study of inflation in the Czech Republic, providing data from 1991 through the second quarter of 1998. After explaining the relationship between Czech inflation, exchange-rate and macro-economic policies, and the koruna crisis of May 1997, the authors examine and discuss some explanations for the persistence of moderate inflation at a level of 10 percent. They conclude by examining policy implications of their findings in the context of the Czech National Bank's new policy of inflation targeting. Journal of Economic Literature, Classification Numbers: E31, E47, E58, O52. 3 figures, 8 tables, 22 references.