Arbeitspapier
The Minimum Inflation Rate for Euroland
As a result of the Balassa effect relative prices change rapidly between and within the euro countries. Thus it is impossible to find a common monetary policy that will result in price stability in all countries. Based on empirical estimates of the Balassa model, the paper calculates a minimum aggregate inflation rate which is compatible with the requirement that no country face a deflation. This minimum aggeragate inflation rate is 0.94% in the euro-11 countries and 1.13% in an extended Europe which incorporates the east European countries.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 377
- Classification
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Wirtschaft
- Subject
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Inflation target
Balassa-Samuelson effect
ECB
- Event
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Geistige Schöpfung
- (who)
-
Reutter, Michael
Sinn, Hans-Werner
- Event
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Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
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2000
- Handle
- Last update
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10.03.2025, 11:45 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Reutter, Michael
- Sinn, Hans-Werner
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2000