This paper assesses the impact of weather shocks on inflation components in the four largest euro area economies. We … combine high-frequency weather data with monthly data on inflation and output growth within a set of Bayesian Vector Autore …-gressions which explicitly considers the seasonal dependence of the shock. Results suggest the presence of significant country …

shock. We also find that the bulk of fiscal adjustment takes place via a rise in government revenue rather than a cut in …-to-GDP ratio from rising as a consequence of the shock. Sub-dividing our sample, we also find that for countries participating in … Economic and Monetary Union (EMU) the primary balance response to a cost of borrowing shock was stronger in the period after …

from Europe, the US and Japan. The model is used to conduct systematic shock simulations and thereby compute a measure of …

response differs depending on the nature of the shock. Broadly speaking, the wage response to permanent shocks is twice as high …