This paper provides a summary of current knowledge on inflation persistence and price stickiness in the euro area … are: i) Under the current monetary policy regime, the estimated degree of inflation persistence in the euro area is … moderate; ii) Retail prices in the euro area are more sticky than in the US; iii) There is significant sectoral heterogeneity …

for the euro area. The model incorporates various other features such as habit formation, costs of adjustment in capital … in the euro area. Using the estimated model, the paper also analyses the output (real interest rate) gap, defined as the …