Nonlinearity and stationarity of inflation rates: The results in the case of the Western Balkans

In this article, we explored the nature of the dynamics and behavior of inflation in the case of the Western Balkans. The inflation rate, according to the test results, in most of the countries can be modeled as a stationary process. The paper applied the test of linearity, and then depending on the results, the battery of linear and nonlinear unit root tests. In particular, they consider structural breaks and asymmetric adjustment in order to obtain robust results. The results of the centered calibration in one case suggest potential unstationary inflation.