shortening the duration of the crisis and a binding zero bound. Inflation should be front loaded. Fiscal-policy multipliers can …

This paper analyzes the long-run determinants of inflation differentials in a monetary union. First, we aim at … establishing some stylized facts relating the regional dispersion in headline inflation rates in the euro area as well as in the …-traded sector as the primary cause of price and inflation differentials, with shocks to productivity in the traded sector being …

standard New-Keynesian model, and may even inflate the equity premium. Second, asset-price movements improve the inflation …-output trade-off so that average output can rise without increasing much average inflation. Finally, a strict inflation …-targeting policy may result in lower average welfare than a more flexible inflation-targeting policy, which instead increases the …