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
Englisch

Bibliographic citation
Series: CESifo Working Paper ; No. 377

Classification
Wirtschaft
Subject
Inflation target
Balassa-Samuelson effect
ECB

Event
Geistige Schöpfung
(who)
Reutter, Michael
Sinn, Hans-Werner
Event
Veröffentlichung
(who)
Center for Economic Studies and ifo Institute (CESifo)
(where)
Munich
(when)
2000

Handle
Last update
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

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