Call for papers - What Drives Inflation in the New EU Member States? (reference ECFIN/C/2008/010)

The Directorate-General for Economic and Financial Affairs (DG ECFIN) of the European Commission is organizing a one-day workshop on 22 October 2008 in Brussels. The workshop aims at improving the understanding of the determinants of inflation in the new EU Member States (NMS). The surveillance of the EU and national economies is at the core of ECFIN's responsibility. High inflation has emerged as one major economic challenge in several Member States over the last couple of years, even before the most recent energy and food price shock. For some of them, it is also the main obstacle on their way to the euro.

The drivers of inflation dynamics in NMS are arguably more complex to discern than those in the 'old' Member States. First, relatively short statistical series and structural breaks complicate the statistical analysis; second, traditional determinants (external price shock, cyclical conditions, etc.) of inflation interplay with transition effects and long-term catching up dynamics, as well as factor and product market integration with the EU; third, EU accession has required adjustments of excise duties and indirect taxes which have had temporary but substantial impact on inflation.

Against this background, the workshop will target applied and empirical papers. More specifically, contributions should focus on cross-country and quantitative analyses and address one or more of the following topics:

1. External vs. domestic drivers of inflation. Contributions should analyse the transmission and relative weight of common/external shocks (e.g. energy prices, food prices, globalization, EU accession,…) and country-specific factors (demand pressures including the role of credit growth, wage/unit labour cost developments) in determining the level and dynamics of inflation in NMS;

 2. Catching-up and transition-related inflation: Contributions should discuss and quantify the impact on inflation from the Balassa-Samuelson effect, structural demand changes (such as rising demand for services due to higher incomes, quality improvements,…) and other elements driving price level convergence, including price deregulation, changes in the level of public subsidies and accession-related taxes. Of particular interest would be papers looking systematically at the impact of migration on wage and price inflation in NMS;  

 3. Role of macroeconomic and structural policies: Contributions should assess the impact of monetary policy and exchange rate movements on inflation in NMS (including the degree of exchange rate pass-through in NMS), as well as the impact of the fiscal policy stance. The actual and potential role of structural policies (e.g. to increase competition or to make labour markets more flexible) would also be of interest.

We invite the submission of abstracts or annotated outlines (one to two pages) for papers related to the above mentioned issues. The workshop will include six to eight presentations, followed by the comments of discussants and a general exchange of views among the participants.

Papers can be co-authored. (40 kB) A set fee of € 4,000 will be paid for each paper irrespective of whether they are authored or co-authored. In addition, the Commission will cover travel and accommodation expenses and provide a daily allowance in line with the contract provisions. Payments will be made in accordance with a service contract which must be signed before work on a paper begins. (83 kB)

The final papers have to be original work created in response to this call for papers and should roughly be 15,000 – 20,000 words in length. Authors will be required to send electronically a full draft of their paper to DG ECFIN by 24 September 2008 and to present it to the workshop. The final version of the paper should be submitted electronically by 21 November 2008.

Selection criteria

A selection committee will be set up to evaluate the submissions. The selection of the papers will be based on the following criteria:

• The clarity of the submission as assessed by the precision with which it (i) explains how the topic will be addressed, (ii) discusses the theoretical and empirical techniques that will be used to analyse specific issues, and (iii) explains the policy relevance of this analysis.
• The quality of the submission as measured by its potential to provide robust economic analysis that offers value-added vis-à-vis the existing academic literature on the drivers of inflation in NMS and relevance for policy-making.
• The high-standing of the author/co-authors as demonstrated by academic excellence and a track record of publishing research on issues related to inflation in new member states in leading journals. To facilitate this assessment, the submission should include an up-to-date curriculum vitae for the author/co-authors.
• The potential to form the basis of a fruitful exchange among the workshop participants.

Deadline for submission: 26 May 2008

Paper outlines and curriculum vitae (including the co-author's) should be submitted electronically no later than 26 May 2008 to the e-mail address ECFIN-INFLATION-NMS@ec.europa.eu, clearly mentioning in the subject line of the e-mail the topic of the paper. This mailbox is reserved solely for submissions. The selection procedure is expected to be completed by mid June. Candidates will be informed in due time of the outcome of the selection procedure.

Further information

Conditional on the quality of the papers, they could be published in a volume collecting the workshop proceedings.

For further information, please contact Géraldine Mahieu.