inflation. Through a novel consumption deflator decomposition, we show that import prices account for 40 percent of the average … supply-demand mismatches. While the results show that firms have passed on more than the nominal cost shock, and have fared … convergence of inflation to target over the next two years. Monetary policy will thus need to remain restrictive to anchor …

Inflation in the euro area has been falling steadily since early 2013 and at the end of 2014 turned negative. Part of … by means of sign restrictions) on inflation in the euro area. The analysis suggests that in the last two years inflation … Bank from reducing the short-term rates to support economic activity and align inflation with the definition of price …

forces. On the one side deviations from zero inflation allow the policy maker to smooth inefficient employment fluctuations … inflation targeting. Overall we find that the Ramsey planner deviates from full price stability and that an optimal rule targets … inflation the real economic activity alongside inflation. -- Optimal monetary policy ; labour market unionization ; threat …