In this paper a model for the dynamics of inflation in Italy is proposed. It is shown that both in the short and long run the inflation patterns can not be explained by a single cause and that many theories contribute to determine the mechanism of price formation in Italy. Changes in monetary and credit markets, along with substantial changes in many sectors of the Italian economy suggest to split the sample period into two sub-samples and modelling the dynamics of inflation differently for each of the periods. Moreover, a robustness analysis rejects the hypothesis of a structural break associated with the institutional changes occurred in 1999, with the adhesion to the EMU and the adoption of the euro.
Modelling Italian inflation : 1970-2006 / E. Bacchiocchi. - Milano : Department of Economics in Milano university, 2009.
Modelling Italian inflation : 1970-2006
E. BacchiocchiPrimo
2009
Abstract
In this paper a model for the dynamics of inflation in Italy is proposed. It is shown that both in the short and long run the inflation patterns can not be explained by a single cause and that many theories contribute to determine the mechanism of price formation in Italy. Changes in monetary and credit markets, along with substantial changes in many sectors of the Italian economy suggest to split the sample period into two sub-samples and modelling the dynamics of inflation differently for each of the periods. Moreover, a robustness analysis rejects the hypothesis of a structural break associated with the institutional changes occurred in 1999, with the adhesion to the EMU and the adoption of the euro.
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