Was the high inflation of the 1970s mostly due to incomplete information about the structure of the economy (an … unavoidable mistake as suggested by Orphanides, 2000)? Or, to weak reaction to expected inflation and/or excessive policy activism … overall empirical performance. We find that both explanations do a good job in accounting for the great inflation. Even with …

assumptions on the functional correspondence between price inflation, inflation expectations and marginal costs. Expectations are … not assumed to be an unbiased predictor of actual inflation and instead derived from the European Commission’s Consumer … Survey data. The results suggest that expectations drive inflation with a lag of about 6 months, which casts further doubt on …

In this paper we present supporting evidence of the existence of heterogeneity in inflation dynamics across euro area … significant inertial (backward looking) behavior in inflation in four of them, while inflation in Germany has a dominat forward … looking component. We then present an optimizing agent model for the area emphasizing the hetergeneity in inflation …

This paper reviews recent approaches to modeling the labour market and assesses their implications for inflation … volatile inflation. Models with wage stickiness and right-to-manage bargaining or with firm-specific labour emerge as the most …

heterogenous propagation of this common shock across sectoral inflation rates, and in particular its slow propagation to inflation … inflation series of the euro area CPI translates into the slow adjustment of euro area aggregate inflation. We first estimate a … dynamic factor model for 404 inflation sub-indices of the euro area CPI. This allows to decompose the dynamics of inflation …

: lagged expectations about monetary policy influence the current inflation rate through an indexation rule. No structural … inflation persistence is assumed. We show that this model can capture stylized facts about short-run inflation dynamics both in … between the degree of inflation persistence and the stability and transparency of monetary policy. Thereby, our model can …

In this paper we report results on inflation persistence using 79 inflation series covering the EU countries, the euro … area and the US for five different inflation variables. The picture that emerges is one of moderate inflation persistence … across the board. In particular we find euro area inflation persistence to be broadly in line with US inflation persistence …

unsystematic monetary policy) have a delayed, persistent, hump shaped effect on inflation. I argue that this empirical pattern is … fragile. In particular it disappears when one corrects for the effects of large shifts (breaks) in average inflation or … estimated response of inflation is not appropriate to fit stylised models of the response of inflation around a stable steady …

We apply both classical and Bayesian econometric methods to characterize the dynamic behavior of inflation for twelve … 1990s. Allowing for a break in intercept, the inflation measures generally exhibit relatively low inflation persistence …. Evidently, high inflation persistence is not an inherent characteristic of industrial economies. JEL Classification: C11, C22, E …