Inflation and Output Comovement in the Euro Area: Love at Second Sight?
AbstractThis paper discusses comovement between inflation and output in the euro area. The strength of the comovement may not be apparent at first sight, but is clear at business cycle frequencies. Our results suggest that at business cycle frequency, the output and core inflation comovement is high and stable, and that inflation lags the cycle in output with roughly half of its variance. The strong relationship of output and inflation hints at the importance of demand shocks for the euro area business cycle.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 13/192.
Date of creation: 11 Sep 2013
Date of revision:
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Other versions of this item:
- Michal Andrle & Jan Bruha & Serhat Solmaz, 2013. "Inflation and Output Comovement in the Euro Area: Love at Second Sight?," Working Papers 2013/07, Czech National Bank, Research Department.
- C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-02 (All new papers)
- NEP-CBA-2013-10-02 (Central Banking)
- NEP-EEC-2013-10-02 (European Economics)
- NEP-MON-2013-10-02 (Monetary Economics)
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