a special focus on persistence of real wages,wage and price inflation. The analysis is conducted within a structural …, as well as the cointegrating properties of theestimated system. Overall, in the long run, wage and price inflation emerge …

This paper examines the impact of downward wage rigidity (nominal and real) onoptimal steady-state inflation. For this … andFinland). The calibrated heterogeneous agent models are then solved for differentsteady state rates of inflation to derive …

inflation in the enlarged euro area, but only to inflation redistribution across countries if continuity of the monetary policy … framework is preserved. In the short term, unanticipated shocks to the real exchange rate may instead affect aggregate inflation … if member countries' economic structure differs. When comparing welfare, inflation and output stabilisation, we find that …

weight is placed by the policy maker on output stabilisation. Only when inflation becomes the only policy objective and …

credibility a pegged exchange rate regime yields a lower loss compared to an inflation targeting policy, even if this policy … for a policy-maker to adopt inflation targeting over a strict exchange rate targeting regime. Full credibility is not a … precondition, but exposure to foreign and financial shocks and high steady state inflation make joining the EMU relatively more …