In most advanced economies, risk-free interest rates – i.e. the rates applicable to assets with minimal credit risk – have fallen to historically low levels over the recent period, in both nominal and real terms. These interest rates are particularly important because they serve as the basis...

In a monetary union, divergences of inflation rates between the participating countries have direct repercussions on their price and cost competitiveness. Bearing this in mind, the article examines the implications of inflation differentials within the euro area and shows that participation in...