Inflation Differentials in Europeef0a2fa8-4873-4136-a346-b22cfe0e152f… · Puzzle I. Large...
Transcript of Inflation Differentials in Europeef0a2fa8-4873-4136-a346-b22cfe0e152f… · Puzzle I. Large...
Inflation Differentialsin Europe
Balázs ÉgertEconomics Department, OECD
Objectives of the presentation
Different factors driving inflation rates in Europe
Differences between mature and catching-up countries
Balassa-SamuelsonPuzzle I.
Large productivity gains in the tradable sector
and yet low Balassa-Samuelson effect in the CPI
The Balassa-Samuelson Puzzle
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B-S effect
inflation 1997-2005
inflation 2005
Source: based on Égert, Halpern and MacDonald (2005)
Balassa-SamuelsonPuzzle II.
Large literature showing low B-S effect
and yet policymakers still argue in terms of the Balassa-Samuelson effect
The Balassa-Samuelson Puzzle
4 elements of the puzzle
The Balassa-Samuelson PuzzleLarge dispersion of productivity gains in tradables
Productivity <->WagesIncomplete wage equalizationLarge productivity gains in non-tradablesLow share of market-based non-tradables in the CPI
Large Dispersion of ProductivityGrowth in Manufacturing
Figure 6. Dispersion of Productivity Growth in Manufacturing
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productivity grow th
SD of productivity grow th w ithin manufacturing
The Balassa-Samuelson PuzzleLarge dispersion of productivity gains in tradables
Productivity <->WagesIncomplete wage equalizationLarge productivity gains in non-tradablesLow share of market-based non-tradables in the CPI
Wage EqualisationFigure 2c. Difference between annual gross nominal wage growth in market services and
manufacturing (1995-2005)
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The Balassa-Samuelson PuzzleLarge dispersion of productivity gains in tradables
Productivity <->WagesIncomplete wage equalizationLarge productivity gains in non-tradablesLow share of market-based non-tradables in the CPI
Large Productivity Gains in Nontradables (1995-2005)
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TRADABLESNONTRADABLES
The Balassa-Samuelson PuzzleLarge dispersion of productivity gains in tradables
Productivity <->WagesIncomplete wage equalizationLarge productivity gains in non-tradablesLow share of market-based non-tradables in the CPI
Low Share of Market Nontradablesin CPI
Simple accounting framework
))(1( NTTSB prodprodp −−=− α
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CEEWestern Europe
Low Share of Market Nontradables in the CPI (2005)
Implications
For the inflation rate
For the real exchange rate
Structural factorsServices/nontradable goods
The usual suspect: Balassa-SamuelsonAdministered/regulated pricesResidential property prices
Tradable goods prices
Structural factorsServices/nontradable goods
The usual suspect: Balassa-SamuelsonAdministered/regulated pricesResidential property prices
Tradable goods prices
Structural factorsServices/nontradable goods
The usual suspect: Balassa-SamuelsonAdministered/regulated pricesResidential property prices
Tradable goods prices
Structural factorsServices/nontradable goods
The usual suspect: Balassa-SamuelsonAdministered/regulated pricesResidential property prices
Tradable goods prices
Tradable GoodsQuality increases
Extension of Engel’s Law:
richer households consume goods of better quality than poorer household;
Real convergence => higher share of goods of higher quality => higher price
Quality increasessame good
example (from 2005): cherry tomato (origin Israel)
Hungary: 250g, 119 HUF (0.40 - 0.50 EUR); 2. class
Austria: 250g, 0.99 – 1.59 EUR; 1. class
Tradable Goods
Pricing-to-Market Practices => cars (very homogenous goods)
Figure 12. The Relative Price Level of Cars (euro area=1, 2006)
euro area price level (VAT included) = 1
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be at ie fr pt nl es it fi gr de se uk dk cy mt
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segment B segment C segment D segment E segment F
Tradable Goods
Distribution Sector
Tradable Goods
. Productivity Growth in the Distribution Sector, Annual Averages, 1995-2004
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LU DE
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Empirical Exercise
Panel estimations
Annual data
Euro area + CEE countries
STRUCTURAL FACTORSBALASSA-SAMUELSON EFFECT
B-S WIDE (CONST.)B-S NARROW (CONST.)PRODUCTIVITY DIFF.
REGULATED PRICES 3 measuresOTHER STRUCTURAL FACTORS
SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICPREAL FINAL HOUSHOLD CONSUMPTIONPRICE LEVEL 97 (CONST.)GDP PER CAPITA
STRUCTURAL FACTORSBALASSA-SAMUELSON EFFECT
B-S WIDE (CONST.)B-S NARROW (CONST.)PRODUCTIVITY DIFF.
REGULATED PRICES 3 measuresOTHER STRUCTURAL FACTORS
SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICPREAL FINAL HOUSHOLD CONSUMPTIONPRICE LEVEL 97 (CONST.)GDP PER CAPITA
STRUCTURAL FACTORSBALASSA-SAMUELSON EFFECT
B-S WIDE (CONST.)B-S NARROW (CONST.)PRODUCTIVITY DIFF.
REGULATED PRICES 3 measuresOTHER STRUCTURAL FACTORS
SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICPREAL FINAL HOUSHOLD CONSUMPTIONPRICE LEVEL 97 (CONST.)GDP PER CAPITA
STRUCTURAL FACTORSBALASSA-SAMUELSON EFFECT
B-S WIDE (CONST.)B-S NARROW (CONST.)PRODUCTIVITY DIFF.
REGULATED PRICES 3 measuresOTHER STRUCTURAL FACTORS
SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICPREAL FINAL HOUSHOLD CONSUMPTIONPRICE LEVEL 97 (CONST.)GDP PER CAPITA
CYCLICAL FACTORS2 measures of OUTPUT GAPULCGOV. SURPLUS/DEFICIT
EXTERNAL FACTORSOIL PRICENEER
OTHER FACTORSHOUSE PRICESVAT INCREASES AND DECREASESMONETARY AGGREGATES
CYCLICAL FACTORS2 measures of OUTPUT GAPULCGOV. SURPLUS/DEFICIT
EXTERNAL FACTORSOIL PRICENEER
OTHER FACTORSHOUSE PRICESVAT INCREASES AND DECREASESMONETARY AGGREGATES
CYCLICAL FACTORS2 measures of OUTPUT GAPULCGOV. SURPLUS/DEFICIT
EXTERNAL FACTORSPRICE OF OILEXCHANGE RATE and OPENNESS
OTHER FACTORSHOUSE PRICESVAT INCREASES AND DECREASESMONETARY AGGREGATES
CYCLICAL FACTORS2 measures of OUTPUT GAPULCGOV. SURPLUS/DEFICIT
EXTERNAL FACTORSOIL PRICENEER
OTHER FACTORSHOUSE PRICESVAT INCREASES AND DECREASESMONETARY AGGREGATES
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Table 13b. Euro Area (excluding Luxembourg) + CEE-10 Dependent variable: annual change in the HICP: )(XfPt =
1999-2005 Regulated prices excluded House prices included House prices excluded GMM GMM GMM OLS OLS OLS OLS GMM GMM GMM GMM OLS OLS
CONSTANT 0.781*** 0.817*** 0.843*** 0.796*** 2.134*** 1.896*** INFLATION (-1) 0.200*** 0.276*** 0.255*** 0.301*** 0.302*** 0.319*** 0.320*** 0.306*** 0.307*** 0.228*** 0.198*** 0.242*** 0.244*** CYCLICAL FACTORS OUTPUT GAP1 0.394**** 0.195*** 0.176*** 0.321*** 0.271*** 0.182** OUTPUT GAP2 0.367*** 0.296*** 0.180*** 0.201*** 0.322*** 0.284*** 0.164*** ULC GOV. SURPLUS/DEFICIT -0.106*** -0.064*** BALASSA-SAMUELSON EFFECT B-S WIDE (CONST.) -0.257** -0.283*** B-S NARROW (CONST.) -0.328** -0.351*** PRODUCTIVITY DIFF. REGULATED PRICES REG1 0.351*** 0.397*** 0.268*** 0.266** 0.273*** 0.276*** 0.223*** 0.269*** 0.182*** 0.187*** 0.221*** 0.229*** REG2 REG3 0.310*** OTHER STRUCTURAL FACTORS SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICP -0.016* -0.034** REAL FINAL HOUSHOLD CONSO PRICE LEVEL 97 (CONST.) -1.199** -0.922* GDP PER CAPITA 0.042*** 0.021*** EXTERNAL FACTORS OIL PRICE (-1) 0.009*** 0.009*** 0.009*** 0.006*** 0.008*** 0.006*** 0.009** 0.009** NEER -0.129** -0.206** NEER (-1) -0.113*** -0.116*** -0.153*** -0.205*** OTHER FACTORS MONETARY AGGREGATES HOUSE PRICES 0.007*** 0.007*** 0.022** 0.017** 0.018** 0.014** 0.013** VAT INCREASES VAT DECREASES R2-adj 0.271 0.380 0.091 0.778 0.778 0.775 0.774 0.411 0.545 0.201 0.268 0.765 0.641 Jarque-Bera normality test (p-value) 0.014 0.116 0.000 0.747 0.717 0.787 0.854 0.000 0.000 0.000 0.000 0.000 0.038 No. of OBS 91 93 91 107 107 107 107 119 119 123 123 134 134 No. of COUNTRIES 17 17 17 17 17 17 17 21 21 21 21 21 21
Notes: See Table 11.
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Table 13b. Euro Area (excluding Luxembourg) + CEE-10 Dependent variable: annual change in the HICP: )(XfPt =
1999-2005 Regulated prices excluded House prices included House prices excluded GMM GMM GMM OLS OLS OLS OLS GMM GMM GMM GMM OLS OLS
CONSTANT 0.781*** 0.817*** 0.843*** 0.796*** 2.134*** 1.896*** INFLATION (-1) 0.200*** 0.276*** 0.255*** 0.301*** 0.302*** 0.319*** 0.320*** 0.306*** 0.307*** 0.228*** 0.198*** 0.242*** 0.244*** CYCLICAL FACTORS OUTPUT GAP1 0.394**** 0.195*** 0.176*** 0.321*** 0.271*** 0.182** OUTPUT GAP2 0.367*** 0.296*** 0.180*** 0.201*** 0.322*** 0.284*** 0.164*** ULC GOV. SURPLUS/DEFICIT -0.106*** -0.064*** BALASSA-SAMUELSON EFFECT B-S WIDE (CONST.) -0.257** -0.283*** B-S NARROW (CONST.) -0.328** -0.351*** PRODUCTIVITY DIFF. REGULATED PRICES REG1 0.351*** 0.397*** 0.268*** 0.266** 0.273*** 0.276*** 0.223*** 0.269*** 0.182*** 0.187*** 0.221*** 0.229*** REG2 REG3 0.310*** OTHER STRUCTURAL FACTORS SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICP -0.016* -0.034** REAL FINAL HOUSHOLD CONSO PRICE LEVEL 97 (CONST.) -1.199** -0.922* GDP PER CAPITA 0.042*** 0.021*** EXTERNAL FACTORS OIL PRICE (-1) 0.009*** 0.009*** 0.009*** 0.006*** 0.008*** 0.006*** 0.009** 0.009** NEER -0.129** -0.206** NEER (-1) -0.113*** -0.116*** -0.153*** -0.205*** OTHER FACTORS MONETARY AGGREGATES HOUSE PRICES 0.007*** 0.007*** 0.022** 0.017** 0.018** 0.014** 0.013** VAT INCREASES VAT DECREASES R2-adj 0.271 0.380 0.091 0.778 0.778 0.775 0.774 0.411 0.545 0.201 0.268 0.765 0.641 Jarque-Bera normality test (p-value) 0.014 0.116 0.000 0.747 0.717 0.787 0.854 0.000 0.000 0.000 0.000 0.000 0.038 No. of OBS 91 93 91 107 107 107 107 119 119 123 123 134 134 No. of COUNTRIES 17 17 17 17 17 17 17 21 21 21 21 21 21
Notes: See Table 11.
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Table 13b. Euro Area (excluding Luxembourg) + CEE-10 Dependent variable: annual change in the HICP: )(XfPt =
1999-2005 Regulated prices excluded House prices included House prices excluded GMM GMM GMM OLS OLS OLS OLS GMM GMM GMM GMM OLS OLS
CONSTANT 0.781*** 0.817*** 0.843*** 0.796*** 2.134*** 1.896*** INFLATION (-1) 0.200*** 0.276*** 0.255*** 0.301*** 0.302*** 0.319*** 0.320*** 0.306*** 0.307*** 0.228*** 0.198*** 0.242*** 0.244*** CYCLICAL FACTORS OUTPUT GAP1 0.394**** 0.195*** 0.176*** 0.321*** 0.271*** 0.182** OUTPUT GAP2 0.367*** 0.296*** 0.180*** 0.201*** 0.322*** 0.284*** 0.164*** ULC GOV. SURPLUS/DEFICIT -0.106*** -0.064*** BALASSA-SAMUELSON EFFECT B-S WIDE (CONST.) -0.257** -0.283*** B-S NARROW (CONST.) -0.328** -0.351*** PRODUCTIVITY DIFF. REGULATED PRICES REG1 0.351*** 0.397*** 0.268*** 0.266** 0.273*** 0.276*** 0.223*** 0.269*** 0.182*** 0.187*** 0.221*** 0.229*** REG2 REG3 0.310*** OTHER STRUCTURAL FACTORS SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICP -0.016* -0.034** REAL FINAL HOUSHOLD CONSO PRICE LEVEL 97 (CONST.) -1.199** -0.922* GDP PER CAPITA 0.042*** 0.021*** EXTERNAL FACTORS OIL PRICE (-1) 0.009*** 0.009*** 0.009*** 0.006*** 0.008*** 0.006*** 0.009** 0.009** NEER -0.129** -0.206** NEER (-1) -0.113*** -0.116*** -0.153*** -0.205*** OTHER FACTORS MONETARY AGGREGATES HOUSE PRICES 0.007*** 0.007*** 0.022** 0.017** 0.018** 0.014** 0.013** VAT INCREASES VAT DECREASES R2-adj 0.271 0.380 0.091 0.778 0.778 0.775 0.774 0.411 0.545 0.201 0.268 0.765 0.641 Jarque-Bera normality test (p-value) 0.014 0.116 0.000 0.747 0.717 0.787 0.854 0.000 0.000 0.000 0.000 0.000 0.038 No. of OBS 91 93 91 107 107 107 107 119 119 123 123 134 134 No. of COUNTRIES 17 17 17 17 17 17 17 21 21 21 21 21 21
Notes: See Table 11.
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Table 13b. Euro Area (excluding Luxembourg) + CEE-10 Dependent variable: annual change in the HICP: )(XfPt =
1999-2005 Regulated prices excluded House prices included House prices excluded GMM GMM GMM OLS OLS OLS OLS GMM GMM GMM GMM OLS OLS
CONSTANT 0.781*** 0.817*** 0.843*** 0.796*** 2.134*** 1.896*** INFLATION (-1) 0.200*** 0.276*** 0.255*** 0.301*** 0.302*** 0.319*** 0.320*** 0.306*** 0.307*** 0.228*** 0.198*** 0.242*** 0.244*** CYCLICAL FACTORS OUTPUT GAP1 0.394**** 0.195*** 0.176*** 0.321*** 0.271*** 0.182** OUTPUT GAP2 0.367*** 0.296*** 0.180*** 0.201*** 0.322*** 0.284*** 0.164*** ULC GOV. SURPLUS/DEFICIT -0.106*** -0.064*** BALASSA-SAMUELSON EFFECT B-S WIDE (CONST.) -0.257** -0.283*** B-S NARROW (CONST.) -0.328** -0.351*** PRODUCTIVITY DIFF. REGULATED PRICES REG1 0.351*** 0.397*** 0.268*** 0.266** 0.273*** 0.276*** 0.223*** 0.269*** 0.182*** 0.187*** 0.221*** 0.229*** REG2 REG3 0.310*** OTHER STRUCTURAL FACTORS SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICP -0.016* -0.034** REAL FINAL HOUSHOLD CONSO PRICE LEVEL 97 (CONST.) -1.199** -0.922* GDP PER CAPITA 0.042*** 0.021*** EXTERNAL FACTORS OIL PRICE (-1) 0.009*** 0.009*** 0.009*** 0.006*** 0.008*** 0.006*** 0.009** 0.009** NEER -0.129** -0.206** NEER (-1) -0.113*** -0.116*** -0.153*** -0.205*** OTHER FACTORS MONETARY AGGREGATES HOUSE PRICES 0.007*** 0.007*** 0.022** 0.017** 0.018** 0.014** 0.013** VAT INCREASES VAT DECREASES R2-adj 0.271 0.380 0.091 0.778 0.778 0.775 0.774 0.411 0.545 0.201 0.268 0.765 0.641 Jarque-Bera normality test (p-value) 0.014 0.116 0.000 0.747 0.717 0.787 0.854 0.000 0.000 0.000 0.000 0.000 0.038 No. of OBS 91 93 91 107 107 107 107 119 119 123 123 134 134 No. of COUNTRIES 17 17 17 17 17 17 17 21 21 21 21 21 21
Notes: See Table 11.
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Table 13b. Euro Area (excluding Luxembourg) + CEE-10 Dependent variable: annual change in the HICP: )(XfPt =
1999-2005 Regulated prices excluded House prices included House prices excluded GMM GMM GMM OLS OLS OLS OLS GMM GMM GMM GMM OLS OLS
CONSTANT 0.781*** 0.817*** 0.843*** 0.796*** 2.134*** 1.896*** INFLATION (-1) 0.200*** 0.276*** 0.255*** 0.301*** 0.302*** 0.319*** 0.320*** 0.306*** 0.307*** 0.228*** 0.198*** 0.242*** 0.244*** CYCLICAL FACTORS OUTPUT GAP1 0.394**** 0.195*** 0.176*** 0.321*** 0.271*** 0.182** OUTPUT GAP2 0.367*** 0.296*** 0.180*** 0.201*** 0.322*** 0.284*** 0.164*** ULC GOV. SURPLUS/DEFICIT -0.106*** -0.064*** BALASSA-SAMUELSON EFFECT B-S WIDE (CONST.) -0.257** -0.283*** B-S NARROW (CONST.) -0.328** -0.351*** PRODUCTIVITY DIFF. REGULATED PRICES REG1 0.351*** 0.397*** 0.268*** 0.266** 0.273*** 0.276*** 0.223*** 0.269*** 0.182*** 0.187*** 0.221*** 0.229*** REG2 REG3 0.310*** OTHER STRUCTURAL FACTORS SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICP -0.016* -0.034** REAL FINAL HOUSHOLD CONSO PRICE LEVEL 97 (CONST.) -1.199** -0.922* GDP PER CAPITA 0.042*** 0.021*** EXTERNAL FACTORS OIL PRICE (-1) 0.009*** 0.009*** 0.009*** 0.006*** 0.008*** 0.006*** 0.009** 0.009** NEER -0.129** -0.206** NEER (-1) -0.113*** -0.116*** -0.153*** -0.205*** OTHER FACTORS MONETARY AGGREGATES HOUSE PRICES 0.007*** 0.007*** 0.022** 0.017** 0.018** 0.014** 0.013** VAT INCREASES VAT DECREASES R2-adj 0.271 0.380 0.091 0.778 0.778 0.775 0.774 0.411 0.545 0.201 0.268 0.765 0.641 Jarque-Bera normality test (p-value) 0.014 0.116 0.000 0.747 0.717 0.787 0.854 0.000 0.000 0.000 0.000 0.000 0.038 No. of OBS 91 93 91 107 107 107 107 119 119 123 123 134 134 No. of COUNTRIES 17 17 17 17 17 17 17 21 21 21 21 21 21
Notes: See Table 11.
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Table 13b. Euro Area (excluding Luxembourg) + CEE-10 Dependent variable: annual change in the HICP: )(XfPt =
1999-2005 Regulated prices excluded House prices included House prices excluded GMM GMM GMM OLS OLS OLS OLS GMM GMM GMM GMM OLS OLS
CONSTANT 0.781*** 0.817*** 0.843*** 0.796*** 2.134*** 1.896*** INFLATION (-1) 0.200*** 0.276*** 0.255*** 0.301*** 0.302*** 0.319*** 0.320*** 0.306*** 0.307*** 0.228*** 0.198*** 0.242*** 0.244*** CYCLICAL FACTORS OUTPUT GAP1 0.394**** 0.195*** 0.176*** 0.321*** 0.271*** 0.182** OUTPUT GAP2 0.367*** 0.296*** 0.180*** 0.201*** 0.322*** 0.284*** 0.164*** ULC GOV. SURPLUS/DEFICIT -0.106*** -0.064*** BALASSA-SAMUELSON EFFECT B-S WIDE (CONST.) -0.257** -0.283*** B-S NARROW (CONST.) -0.328** -0.351*** PRODUCTIVITY DIFF. REGULATED PRICES REG1 0.351*** 0.397*** 0.268*** 0.266** 0.273*** 0.276*** 0.223*** 0.269*** 0.182*** 0.187*** 0.221*** 0.229*** REG2 REG3 0.310*** OTHER STRUCTURAL FACTORS SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICP -0.016* -0.034** REAL FINAL HOUSHOLD CONSO PRICE LEVEL 97 (CONST.) -1.199** -0.922* GDP PER CAPITA 0.042*** 0.021*** EXTERNAL FACTORS OIL PRICE (-1) 0.009*** 0.009*** 0.009*** 0.006*** 0.008*** 0.006*** 0.009** 0.009** NEER -0.129** -0.206** NEER (-1) -0.113*** -0.116*** -0.153*** -0.205*** OTHER FACTORS MONETARY AGGREGATES HOUSE PRICES 0.007*** 0.007*** 0.022** 0.017** 0.018** 0.014** 0.013** VAT INCREASES VAT DECREASES R2-adj 0.271 0.380 0.091 0.778 0.778 0.775 0.774 0.411 0.545 0.201 0.268 0.765 0.641 Jarque-Bera normality test (p-value) 0.014 0.116 0.000 0.747 0.717 0.787 0.854 0.000 0.000 0.000 0.000 0.000 0.038 No. of OBS 91 93 91 107 107 107 107 119 119 123 123 134 134 No. of COUNTRIES 17 17 17 17 17 17 17 21 21 21 21 21 21
Notes: See Table 11.
4
Table 13b. Euro Area (excluding Luxembourg) + CEE-10 Dependent variable: annual change in the HICP: )(XfPt =
1999-2005 Regulated prices excluded House prices included House prices excluded GMM GMM GMM OLS OLS OLS OLS GMM GMM GMM GMM OLS OLS
CONSTANT 0.781*** 0.817*** 0.843*** 0.796*** 2.134*** 1.896*** INFLATION (-1) 0.200*** 0.276*** 0.255*** 0.301*** 0.302*** 0.319*** 0.320*** 0.306*** 0.307*** 0.228*** 0.198*** 0.242*** 0.244*** CYCLICAL FACTORS OUTPUT GAP1 0.394**** 0.195*** 0.176*** 0.321*** 0.271*** 0.182** OUTPUT GAP2 0.367*** 0.296*** 0.180*** 0.201*** 0.322*** 0.284*** 0.164*** ULC GOV. SURPLUS/DEFICIT -0.106*** -0.064*** BALASSA-SAMUELSON EFFECT B-S WIDE (CONST.) -0.257** -0.283*** B-S NARROW (CONST.) -0.328** -0.351*** PRODUCTIVITY DIFF. REGULATED PRICES REG1 0.351*** 0.397*** 0.268*** 0.266** 0.273*** 0.276*** 0.223*** 0.269*** 0.182*** 0.187*** 0.221*** 0.229*** REG2 REG3 0.310*** OTHER STRUCTURAL FACTORS SHARE OF RECREATION IN THE HICP SHARE OF FOOD IN THE HICP -0.016* -0.034** REAL FINAL HOUSHOLD CONSO PRICE LEVEL 97 (CONST.) -1.199** -0.922* GDP PER CAPITA 0.042*** 0.021*** EXTERNAL FACTORS OIL PRICE (-1) 0.009*** 0.009*** 0.009*** 0.006*** 0.008*** 0.006*** 0.009** 0.009** NEER -0.129** -0.206** NEER (-1) -0.113*** -0.116*** -0.153*** -0.205*** OTHER FACTORS MONETARY AGGREGATES HOUSE PRICES 0.007*** 0.007*** 0.022** 0.017** 0.018** 0.014** 0.013** VAT INCREASES VAT DECREASES R2-adj 0.271 0.380 0.091 0.778 0.778 0.775 0.774 0.411 0.545 0.201 0.268 0.765 0.641 Jarque-Bera normality test (p-value) 0.014 0.116 0.000 0.747 0.717 0.787 0.854 0.000 0.000 0.000 0.000 0.000 0.038 No. of OBS 91 93 91 107 107 107 107 119 119 123 123 134 134 No. of COUNTRIES 17 17 17 17 17 17 17 21 21 21 21 21 21
Notes: See Table 11.
ConclusionCyclical and external factors are very importantStructural factors are also important
services + goodsbut B-S effect is not very important