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Fast micro and slow macro: can aggregation explain the persistence of inflation?

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  • Filippo Altissimo
  • Benoît Mojon
  • Paolo Zaffaroni

Abstract

An aggregation exercise is proposed that aims at investigating whether the fast average adjustment of the disaggregate inflation series of the euro area CPI translates into the slow adjustment of euro area aggregate inflation. We first estimate a dynamic factor model for 404 inflation sub-indices of the euro area CPI. This allows to decompose the dynamics of inflation sub-indices in two parts: one due to a common

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Bibliographic Info

Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-07-02.

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Date of creation: 2007
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Handle: RePEc:fip:fedhwp:wp-07-02

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Keywords: Inflation (Finance) ; Consumer price indexes ; Euro;

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