Inflation differentials in EMU: what can we learn from the time series evidence?

Thomai Filippeli ()

Economics Bulletin, 2011, vol. 31, issue 3, 2541-2548

Abstract: This note discusses whether the inflation process in Portugal, Ireland, Greece and Spain - countries that after the launch of the euro experienced national inflation rates above the weighted average of the EMU- has different time series properties from the EMU average and explains the possible implications of inflation differentials for the union and the national governments of member-countries. We find that the inflation differentials in Greece, Portugal and Spain are a long-run phenomenon which leads to a continuous real exchange appreciation. We interpret this as evidence for the debt problems that have arisen over the last two years in euro area.

Keywords: currency union; inflation differentials; euro area; bayesian estimation (search for similar items in EconPapers)
JEL-codes: C1 E6 (search for similar items in EconPapers)
Date: 2011-09-07
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Citations: View citations in EconPapers (1)

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