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So far apart and yet so close- Should the ECB care about inflation differentials?

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  • Zsolt Darvas
  • Guntram B. Wolff

Abstract

Inflation rates can differ across regions of monetary unions. We show that in the euro area, the US, Canada, Japan and Australia, inflation rates have been substantially and persistently different in different regions. Differences were particularly substantial in the euro area. Inflation differences can reflect normal adjustment processes such as price convergence or the Balassa-Samuelson effect, or can reflect the different cyclical position of regions. But they can also be...

Suggested Citation

  • Zsolt Darvas & Guntram B. Wolff, 2014. "So far apart and yet so close- Should the ECB care about inflation differentials?," Policy Contributions 848, Bruegel.
    • Handle: RePEc:bre:polcon:848
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    Cited by:

    1. Roberto Tamborini, 2017. "Why are Macroeconomic Imbalances so Important for the European Monetary Union?," EconPol Policy Brief 02, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    2. Roberto Tamborini, 2017. "Why are Macroeconomic Imbalances so Important for the European Monetary Union?," EconPol Policy Brief 2, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Henckel, Timo & Menzies, Gordon D. & Moffatt, Peter & Zizzo, Daniel J., 2019. "Three dimensions of central bank credibility and inferential expectations: The Euro zone," Journal of Macroeconomics, Elsevier, vol. 60(C), pages 294-308.

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