This paper analyses the role of inflation expectations in the euro area. On one hand, the question is how inflation … expectations affect both inflation and output, and, on the other hand, how inflation expectations reflect developments in these … variables. The analyses make use of a simple VAR model of inflation, inflation expectations and the output gap that allows for …

This paper examines recent changes in the cyclicality of euro area inflation. We estimate time-varying parameters for … become steeper since 2012. Thus, the current low level of inflation and persistently negative output gap increase the risk … that euro area inflation will stay below the monetary policy target for an extended period. …

market policies among member countries if the common central bank can credibly precommit to a low inflation target or if …

. Inflation is higher in a monetary union with all finite degrees of central bank conservatism. In addition, we consider an … that labor unions are only interested in employment and real wages (not directly inflation) and that all structural …

satisfy a new central bank mandate specifying greater emphasis on inflation stabilisation. In this case, our results show that … inflation may fall dramatically before it gradually rises to its new long run level. The potential for inflation to undershoot …

output and inflation. …

concerning the determination of inflation, output and the exchange rate. We show that an increased central bank preference for …