Regional Price Adjustment in a Monetary Union the Case of EMU

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Regional Price Adjustment in a Monetary Union the Case of EMU

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Jan Marc Berk
Job Swank

Additional information is available for the following registered author(s):

Jan Marc Berk

Abstract

Using a New-Keynesian framework, we investigate how far the inflationary processes in member states of EMU cause regional price levels to converge. We fail to produce hard evidence of the present existence of such an adjustment mechanism, not-withstanding that inflation in some countries tends to converge towards the euro area level. Overall, inflation persistence has declined significantly over the years, but there are still marked differences between countries on this score. We conclude that the euro area is not an optimal currency area yet, lending support to the quest for further structural reforms in European labour and product markets.

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Paper provided by Netherlands Central Bank, Monetary and Economic Policy Department in its series MEB Series (discontinued) with number 2002-7.

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Date of creation: May 2002
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Handle: RePEc:dnb:mebser:2002-7

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Paper
- Berk, J.M & Swank, J., 2002. "Regional price adjustment in a monetary union: the case of EMU," Serie Research Memoranda 0016, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics. [Downloadable!]

This paper has been announced in the following NEP Reports:

NEP-ALL-2003-08-17 (All new papers)
NEP-EEC-2003-08-17 (European Economics)
NEP-GEO-2003-08-17 (Economic Geography)
NEP-IFN-2003-08-17 (International Finance)
NEP-MON-2003-08-17 (Monetary Economics)

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Ivo J. M. Arnold & Jan J.G. Lemmen, 2006. "Inflation Expectations and Inflation Uncertainty in the Eurozone: Evidence from Survey Data," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Other versions:
- Ivo J.M. Arnold & Jan J.G. Lemmen, 2008. "Inflation Expectations and Inflation Uncertainty in the Eurozone: Evidence from Survey Data," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(2), pages 325-346, July. [Downloadable!] (restricted)

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