This paper analyzes the long-run determinants of inflation differentials in a monetary union. First, we aim at …some stylized facts relating the regional dispersion in headline inflation rates in the euro area as well as in the …-traded sector as the primary cause of price and inflation differentials, with shocks to productivity in the traded sector being …

-2007 assiduously and inaccurately avoided forecasting deficit levels that would exceed the 3% Stability and Growth Pact threshold …

discipline can be restored via fiscal rules such as a legal cap on the budget deficit, forecasting bias can defeat such rules …. The members of the eurozone are supposedly constrained by the fiscal caps of the Stability and Growth Pact. Yet ever since …•Despite the well-known tendency of eurozone members to exceed the 3% cap on budget deficits, often in consecutive …

cyclical and inflation conditions vary substantially among countries. Labor market policies during this first year will … unemployment, structural unemployment, and inflation may all be higher in the future as a result of the single currency. Although …

The paper discusses the choice between inflation targeting and monetary targeting as a strategy for the Eurosystem, the … the Eurosystem. The choice between inflation targeting and monetary targeting is, in effect, a choice between high and low … transparency. Inflation targeting and monetary targeting, in practice, imply similar policy decisions, but monetary targeting …

income, and the responsiveness of aggregate earnings, asset prices and inflation to monetary policy shocks. We quantify all …