Author (Corporate) | European Commission: DG Economic and Financial Affairs |
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Series Title | European Economy: Economic Papers |
Series Details | No.446, October 2011 |
Publication Date | October 2011 |
ISBN | 978-92-79-19230-2 |
ISSN | 1725-3187 |
EC | KC-AI-11-446-EN-N |
Content Type | Journal | Series | Blog, Report |
Why has euro area (core) inflation not fallen further during and after the "great recession"? How different are inflation dynamics across Member States? This paper analyses core inflation dynamics in the euro area and its Member States using a hybrid specification of the Phillips curve. Inflation expectations are directly observed from an expert survey, so no assumptions need to be imposed about expectations formation. The choice of the hybrid Phillips curve framework is vindicated, as the data clearly indicate the relevance of both backward-looking inflation and inflation expectations. The impact of the output gap on core inflation is significant but not large. |
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Source Link | Link to Main Source http://ec.europa.eu/economy_finance/publications/economic_paper/2011/ecp446_en.htm |
Countries / Regions | Europe |