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Is there a trade-off between inflation variability and output-gap variability in the EMU countries?

Philip Arestis
Authors registered in the RePEc Author Service: Martin Robert Weale ()

No 238, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: This paper examines the performance of monetary policy in eleven EMU countries for the whole period of the EMS. This is based on the trade-off between inflation variability and output-gap variability. To this end, we examine whether the introduction of an implicit inflation targeting by the EMU member countries after the Maastricht Treaty, changed the trade-off between inflation variability and output-gap variability. We employ a stochastic volatility model for two sub-periods of the EMS (i.e. before and after the Maastricht Treaty). We find that the trade-off varies amongst EMU countries. The implication of these findings is that there are asymmetries in the euro area, due to different economic structures among the member countries of the EMU.

Date: 2004-05
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
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Related works:
Journal Article: Is There a Trade‐Off Between Inflation Variability and Output‐Gap Variability in the EMU Countries? (2004) Downloads
Working Paper: Is There A Trade-Off Between Inflation Variability And Output-Gap Variability in The EMU Countries? (2003) Downloads
Working Paper: Is There A Trade-Off Between Inflation Variability and Output-Gap Variability in The EMU Countries? (2002) Downloads
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