STOCK MARKET AND ECONOMIC GROWTH IN THE CENTRAL AND EASTERN EUROPEAN COUNTRIES

Inflation is a macroeconomic phenomenon, which is intensively experimented by the Central and Eastern European (GEE) countries, the new members of the European Union. The analysis was performed on a group of 10 Central and East European countries for the period of 1990-2014. The aim of this study is to analyse the inflation phenomenon in this countries during the mentioned period that has been characterized by passing from the hyperinflation to deflation. The evolution of inflation rate is extremely important in the present context because of the EU integration, and the differences between inflation rates will influence the real wages and interest which, in their turn, will affect the capital flows and labour force. The research methodology is new, instead of the classical analyses of ARCH type, the Markov Switching Auto Regressive (MS-AR) model is used.