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How Anchored Are Inflation Expectations in EMU Countries?

  • Carin van der Cruijsen
  • Maria Demertzis

Anchored inflation expectations help stabilize inflation. Previous results indicate that monetary policy has been effective in breaking the link between actual and expected inflation at the euro area level. In this paper we examine whether this is also true at the national level. We define the �disconnect' between inflation and inflation expectations and then proceed to examine the extent to which this disconnect exists for a number of euro area countries. Our findings suggest that country-specific inflation experiences still affect national inflation expectations, and certainly more by comparison to the aggregate euro area level. EMU has therefore not made this link disappear at the national level.

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File URL: http://www.dnb.nl/binaries/235%20-%20How%20Anchored%20Are%20Inflation%20Expectations%20in%20EMU%20countries_tcm46-227926.pdf
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Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 235.

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Date of creation: Dec 2009
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Handle: RePEc:dnb:dnbwpp:235
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  1. Antulio N. Bomfim & Glenn D. Rudebusch, 1997. "Opportunistic and deliberate disinflation under imperfect credibility," Working Papers in Applied Economic Theory 97-07, Federal Reserve Bank of San Francisco.
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