Inflation differentials in a Monetary Union: the case of Malta

Brian Micallef and Cyrus Laurent
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Cyrus Laurent: Central Bank of Malta

No WP/05/2013, CBM Working Papers from Central Bank of Malta

Abstract: The objective of this paper is to enhance the understanding of inflation dynamics in Malta and investigate the underlying sources of inflation differentials with the euro area. A country that registers persistently higher inflation than its main trading partners will suffer from a deterioration in its external price competitiveness, with subsequent losses in output and employment. This is even more relevant in the context of a monetary union, where asymmetric shocks cannot be corrected by changes in monetary or exchange rate policies but rather through structural policies and relative adjustments in prices and wages.

Pages: 50 pgs
Date: 2013
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Citations: View citations in EconPapers (2)

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https://www.centralbankmalta.org/file.aspx?f=444 First version, 2013 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mlt:wpaper:0513

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