Inflation differentials in EMU: what can we learn from the time series evidence?
AbstractThis note discusses whether the inflation process in Portugal, Ireland, Greece and Spain - countries that after the launch of the euro experienced national inflation rates above the weighted average of the EMU- has different time series properties from the EMU average and explains the possible implications of inflation differentials for the union and the national governments of member-countries. We find that the inflation differentials in Greece, Portugal and Spain are a long-run phenomenon which leads to a continuous real exchange appreciation. We interpret this as evidence for the debt problems that have arisen over the last two years in euro area.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 31 (2011)
Issue (Month): 3 ()
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currency union; inflation differentials; euro area; bayesian estimation;
Find related papers by JEL classification:
- C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
- E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
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