The empirical literature on the transmission of monetary policy to inflation in Italy has stressed the importance of … the exchange rate and, to some extent, of the demand channel; recently, the roles of inflation expectations and the fiscal … situation have been emphasized. This paper uses vector auto-regression to address this issue. The results suggest that inflation …

level, after controlling for inflation expectations, and whether it is concentrated among those firms that are more exposed …

Generalized Dynamic Factor Model to derive a set of core inflation indicators that, combining national with area-wide data, allow …-wide inflation once the information contained in area-wide data has been exploited, and whether it is useful, in order to track ECB …

useful role emerges for the unit labour cost indicator, which contains information on potential output that helps to reduce … the volatility of the output gap. Finally, the estimated weights for the objectives of monetary policy show that … considerable importance is attributed to interest-rate smoothing, greater than to output gap stabilization. This finding indicates …

in output and inflation are due to changes in potential output or to cyclical demand and cost shocks. We refer to this … during and following periods of large changes in potential output the IP significantly affects the dynamics of inflation and … loose (restrictive) for some time when there is a large decrease (increase) in potential output in comparison with a full …