Optimal Inflation Weights in the Euro Area

Daniela Bragoli, Massimiliano Rigon (massimiliano.rigon@bancaditalia.it) and Francesco Zanetti

No 1503, BCAM Working Papers from Birkbeck Centre for Applied Macroeconomics

Abstract: This study investigates the appropriate measure for stabilizing inflation in the Euro Area. We use a model that accounts for both the heterogeneity observed in the degree of price rigidities across regions and sectors, and asymmetry of real disturbances in relative prices. Our work shows that the optimal weights to assign to each region or sector result from complex interactions between the degree of price stickiness, economic size and the distribution of shocks within regions.

Keywords: Optimal monetary policy; Euro Area regions; asymmetric shocks; asymmetric price stickiness. (search for similar items in EconPapers)
JEL-codes: E52 F41 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://eprints.bbk.ac.uk/26636/1/26636.pdf First version, 2015 (application/pdf)

Related works:
Journal Article: Optimal Inflation Weights in the Euro Area (2016)
Working Paper: Optimal inflation weights in the euro area (2016)
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