Divergent Inflation Rates in EMU

Philip Lane and Patrick Honohan

The Institute for International Integration Studies Discussion Paper Series from IIIS

Abstract: We analyze the sources of divergent national inflation rates among EMU member countries. At one level, we review the Irish ‘outlier’ experience; at another, we estimate panel regressions for the 1999-2001 period. We highlight the role played by differential exposure to euro exchange rate movements in explaining inflation divergence. In addition, we find evidence that output gaps and a “price level convergence” effect have also been important. We draw some policy conclusions for the accession countries that are hoping to join EMU.

Keywords: CIS7; international financial institutions; policy reform; external debt (search for similar items in EconPapers)
Date: 2003-07-01
New Economics Papers: this item is included in nep-ifn and nep-mon
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Citations: View citations in EconPapers (142)

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Journal Article: Divergent inflation rates in EMU (2003)
Working Paper: Divergent Inflation Rates in EMU (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:iis:dispap:iiisdp05

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