Is there any relationship between producer price index and consumer price index in the Czech Republic?
Journal Title: Economic Research-Ekonomska Istraživanja - Year 2018, Vol 31, Issue 1
Abstract
This article tests the expenditure-switching model in the Czech Republic to inspect the causal link between the Producer Price Index (P.P.I.) and Consumer Price Index (C.P.I.). The results of the co-movement between the P.P.I. and C.P.I. in the period indicate a positive relationship across the chosen period. We notice that in the frequency domain, the two variables have a relationship in higher spectrums (short-term). The results also show that comovements exist during structural reforms and financial crises, which in turn supports the expenditure-switching model. The C.P.I. and P.P.I. are sensitive to variations in exchange rates, which pass through prices at the domestic level. Exchange rate shocks lead to inflationary pressure; therefore, long-term oriented intervention policies of the central banks will be more efficient. This article provides substantial information to exporters about price adjustments to exchange rate fluctuation.
Authors and Affiliations
Khalid Khan, Chi-Wei Su, Ran Tao, Chien-Chi Chu
Keywords
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- EP ID EP543758
- DOI 10.1080/1331677X.2018.1498007
- Views 74
- Downloads 0
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