Determinants of inflation and price level differentials across the euro area countries

Malin Andersson, Klaus Masuch and Marc Schiffbauer

No 1129, Working Paper Series from European Central Bank

Abstract: This paper analyses the determinants of inflation differentials and price levels across the euro area countries. Dynamic panel estimations for the period 1999-2006 show that inflation differentials are primarily determined by cyclical positions and inflation persistence. The persistence in inflation differentials appears to be partly explained by administered prices and to some extent by product market regulations. In a cointegrating framework we find that the price level of each euro area country is governed by the levels of GDP per capita. JEL Classification: E32, E52, E43, F2

Keywords: convergence; inflation differentials; inflation persistence; price level (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac, nep-mon and nep-opm
Note: 427284
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Citations: View citations in EconPapers (26)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20091129

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