Theory and evidence suggest that in an environment of well-anchored expectations, temporary economic news or shocks should not affect agents' expectations of inflation in the long term. Our estimated structural VARs show that both long- and short-term inflation expectations are sensitive to...

In order to assess the effect of fiscal rules in Stage Three of EMU for France and Germany, Bayoumi and Eichengreen's (1992) structural VAR analysis is extended by including the general government financial surplus and conditioning by external variables. This allows a distinction between fiscal...

Central banks should dispose of a precise measure of the structural inflation, i.e. the inflation adjusted from the economic cycle. This component of inflation, also called core inflation, is deduced from a structural VAR. Economists agree upon the long-term neutrality of inflation on...