UNDERLYING FACTORS OF PERSISTENT INFLATION IN ROMANIA

Price stability has become the main focus of the monetary policy ofthe candidate countries to the European Monetary Union as the best way to ensurenominal convergence and to promote sustainable economic growth. In our analysisof the inflation evolution we have considered the factors causing persistentinflation over the medium and long term. This paper emphasizes the link betweenthe inflation rate and cost-push, demand-pull and imported inflation. The empiricalanalysis shows that all the variables are statistically significant and correctlysigned and the chosen model explains well the persistent factors of inflation inRomania.