are affected by the undershooting of the euro area inflation target. To shed light on this issue, we estimate an open … energy prices have been the main disinflationary driver. But low core inflation in the euro area has also had a clear and … have been more affected. The scope for monetary response to low inflation in non-euro area EU countries depends on concerns …

inflation targeting rule that includes output. Implications for the euro as a reserve currency are examined in the light of the …The success of European Economic and Monetary Union (EMU) will depend on the stability of the euro. The monetary policy … framework is yet to be decided, but is likely to involve either money or inflation targeting. Stochastic simulations compare the …

Do euro area inflation expectations remain well-anchored? This paper finds that the protracted period of low (and below …-target) inflation in the euro area since 2013 has weakened their anchoring. Testing their sensitivity to inflation and macroeconomic … news, this paper expands existing results in two key dimensions. First, by analyzing all available (advanced) inflation …

Despite closing output gaps and tightening labor markets, inflation has remained low in the euro area. Based on an … augmented Phillips Curve framework, we find that this phenomenon-sometimes attributed to low global inflation-has been primarily … caused by a remarkable persistence of inflation, keeping it low despite the reduction in slack. This feature is shown to be …

money in forecasting euro-area inflation. We compare the predictive performance within and among various classes of … contains relevant information for inflation in some model classes. Money-based New Keynesian DSGE models and VARs incorporating …

The ECB''s objective of medium-term inflation below 2 percent has been portrayed by critics as ambiguous, asymmetric …, and excessively stringent. This paper attempts a comprehensive evaluation of the trade-offs for the euro area and finds … that: (1) in terms of guiding inflation expectations and policymaking, the current definition has functioned much as would …

The paper evaluates the 24-month ahead inflation forecasting performance of various indicators of underlying inflation … and structural models. The inflation forecast errors resulting from model misspecification are larger than the errors …) overperform other measures over the monetary policy horizon and are leading indicators of headline inflation. Trimmed means …

area liquidity. U.S. excess liquidity also enters consistently positive as a determinant of euro area inflation. There is … euro area. There is much discussion about what constitutes global excess liquidity and our approach adjusts liquidity for … longer-term interest rate and output effects. We find that especially excess liquidity in the U.S. leads developments in euro …

This paper explores inflation determinants within the EU and implications for new members'' euro adoption plans. Factor … analysis partitions observed inflation in EU25 countries into common-origin and country-specific (idiosyncratic) components …. Cross-country differences in common-origin inflation within the EU are found to depend on gaps in the initial price level …