Sources of Inflation Persistence in the Euro Area

This file is part of IDEAS, which uses RePEc data

Sources of Inflation Persistence in the Euro Area

Author Info

Boris Cournède
Alexandra Janovskaia
Paul van den Noord ()

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

Abstract

In recent years, inflation in the euro area has failed to decelerate decisively while cyclical slack built up in the economy. Is this phenomenon more than a peculiarity in recent data? Is it related to structural policy settings? Econometric analysis conducted on two decades of quarterly data covering 17 countries yields a yes on both counts. First, inflation is shown to respond significantly more weakly to cyclical slack in the euro area than in countries such as the United Kingdom, the United States or Canada. Secondly, this lack of responsiveness is found to be related in a statistically significant way to more rigid structural policy settings. The results pass a wide range of robustness checks. This Working Paper relates to the 2005 OECD Economic Survey of the euro area (www.oecd.org/eco/surveys/euroarea).

Les causes de la persistance de l'inflation dans la zone euro
Au cours des dernières années, l’inflation ne s’est pas ralentie de manière sensible au sein de la zone euro alors même que l’écart de production y devenait de plus en plus négatif. Ce phénomène est-il plus profond qu’une bizarrerie des statistiques économiques récentes ? Y a-t-il un lien avec les caractéristiques structurelles de la zone euro ? L’analyse économétrique de deux décennies de données trimestrielles pour dix-sept pays conduit à répondre oui à chacune de ces questions. Premièrement, il apparaît que, pour un même écart de production négatif, l’inflation ralentit moins dans la zone euro que dans des pays comme le Royaume-Uni, les États-Unis ou le Canada. Deuxièmement, il existe un lien statistiquement significatif entre ce manque de réactivité et une plus grande rigidité des politiques structurelles. La robustesse de ces résultats est confirmée par un large éventail de tests. Ce Document de travail se rapporte à l'Etude économique de l'OCDE de la zone euro, 2005 (www.oecd.org/eco/etudes/zoneeuro).

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

Publisher Info
Paper provided by OECD Economics Department in its series OECD Economics Department Working Papers with number 435.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length:
Date of creation: 20 Jul 2005
Date of revision:
Handle: RePEc:oec:ecoaaa:435-en

Contact details of provider:
Postal: 2 rue Andre Pascal, 75775 Paris Cedex 16
Email:
Web page: http://www.oecd.org
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: ().

Find related papers by JEL classification:
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

This paper has been announced in the following NEP Reports:

NEP-ALL-2005-08-13 (All new papers)
NEP-CBA-2005-08-13 (Central Banking)
NEP-EEC-2005-08-13 (European Economics)
NEP-MAC-2005-08-13 (Macroeconomics)
NEP-MON-2005-08-13 (Monetary Economics)

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.)

Ian Babetskii & Fabrizio Coricelli & Roman Horváth, 2007. "Measuring and Explaining Inflation Persistence: Disaggregate Evidence on the Czech Republic," Working Papers IES 2007/22, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2007. [Downloadable!]
Other versions:
- Ian Babetskii & Fabrizio Coricelli & Roman Horvath, 2007. "Measuring and Explaining Inflation Persistence: Disaggregate Evidence on the Czech Republic," Working Papers 2007/1, Czech National Bank, Research Department. [Downloadable!]

Statistics

Access and download statistics

Did you know? You too can volunteer for RePEc, for example by encouraging others to register as authors.

This page was last updated on 2008-11-17.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.