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One for all: The ECB's inflation target

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  • Weber, Henning

Abstract

The ongoing sovereign debt crisis and the manifold attempts to resolve it imply the possibility that inflation rates in countries of the euro area will differ from one another for an extended period of time. For instance, some propose that the North should accept inflation rates above the euro-area average to ease the burden of adjustment in the South. In order to understand better some of the welfare consequences of proposals like this one, this note looks into what rate of inflation a central bank should target in a monetary union and what determines a region's weight in this target.

Suggested Citation

  • Weber, Henning, 2012. "One for all: The ECB's inflation target," Kiel Policy Briefs 54, Kiel Institute for the World Economy.
    • Handle: RePEc:zbw:ifwkpb:54
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    File URL: https://www.econstor.eu/bitstream/10419/64616/1/726473405.pdf
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    References listed on IDEAS

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    1. Hoffmann, Johannes & Veronese, Giovanni & Álvarez, Luis J. & Le Bihan, Hervé & Dias, Daniel & Dhyne, Emmanuel & Vilmunen, Jouko & Lünnemann, Patrick & Jonker, Nicole & Rumler, Fabio, 2005. "Price setting in the euro area: some stylized facts from individual consumer price data," Working Paper Series 524, European Central Bank.
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    5. Weber, Henning, 2012. "The optimal inflation rate and firm-level productivity growth," Kiel Working Papers 1773, Kiel Institute for the World Economy.
    6. Benigno, Pierpaolo, 2004. "Optimal monetary policy in a currency area," Journal of International Economics, Elsevier, vol. 63(2), pages 293-320, July.
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    Cited by:

    1. Chatterjee, Sidharta, 2014. "Equilibrium Models of Macroeconomic Science: What to Look For in (DSGE) Models?," MPRA Paper 53893, University Library of Munich, Germany.

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