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STOCHASTIC MODELS FOR THE INFLATION RATE IN ROMANIA
Carmen Pintilescu, Dinu Airinei, Ionut-Cristian Baciu, Daniela Viorica

ABSTRACT. This paper estimates a stochastic model for the inflation rate in Romania that integrates economic characteristics specific to this country, namely, the high importance of occupied population in the agricultural sector. Due to the dependence of this sector on the meteorological conditions, the estimated stochastic models include a seasonal component, and it belongs to the SARIMA (Seasonal Autoregressive and Moving Average models) type. Based on this model, the values of the inflation rate for the next two quarters were forecasted, and it has been noticed that the inflation target for the year 2015 set by the National Bank of Romania, which is equal to 2.5%+-1 percentage point, will not be reached since there is a risk that the deflationist phenomenon may occur. Given the importance of ensuring and maintaining the price stability as the main goal of monetary policy in Romania, the results of the empirical study obtained in the paper may represent a support for the authorities with economic decision-making power .

KEYWORDS: inflation rate, stochastic models, seasonal ARIMA models.

JEL classification: C53, E31.