We examine the indicator property of the monetary indicator for inflation. Using a P*-model, Svensson shows …

Inflation is a monetary phenomenon. While this statement is widely accepted in terms of a long-run relationship, the … quantity theory has been made operational also for the short-run dynamics of inflation by so-called Pstar models. An error … inflation. The response of the HICP is strongly positive. Other factors such as raw material prices and unit labor costs also …

, notwithstanding that inflation in some countries tends to converge towards the euro area level. Overall, inflation persistence has …