Despite rising unemployment and a lack of economic growth,Greece cannot afford to ignore the challenge of controllinginflation.

Since the beginning of the eurozone crisis, Greece has experienced a sharp fall in GDP and a large increase in unemployment. Nicholas Apergis argues that another policy challenge facing Greece is also highly significant: controlling inflation. Assessing the inflation dynamics within the country between 1981 and 2009, he outlines three dynamics important to understanding Greek inflation: inflation persistence, inflation spillovers between sectors of the economy, and the domestic ‘Balassa-Samuelson’ effect.