We assess the effects of financial shocks on inflation, and to what extent financial shocks can account for the … shocks through sign restrictions. Our main finding is that expansionary financial shocks temporarily lower inflation. This … during the latest financial crisis. We then explore the transmission channels of financial shocks relevant for inflation, and …

economies in terms of both output and inflation. In the case of a monetary union, we find that stabilisation of output in the … country where the crisis originated and a positive inflation rate in the other country. …