), the problem of instability is simply transferred to inflation rate differentials, what we call the (impossibility of the …) "uncovered inflation rate parity condition" in a monetary union. The analysis of the actual divergences and imbalances in the EMU …, then, suggests that failure to respect the "uncovered inflation rate parity condition" in a monetary union may lead to …

back to a decade of remarkable macroeconomic stability. Somewhat surprisingly, though, inflation differentials across … presents a stylized theoretical model of a monetary union which demonstrates how persistent inflation differentials can arise … from inflation inertia in conjunction with the loss of monetary control on the national level. The interaction of inflation …