The Consequences of Persistent Inflation Differentials for the Conduct of a Common Monetary Policy, Monetary Dialogue, September 2014

15-09-2014

After the adoption of the single currency, inflation differentials in euro-area countries have persisted. Countries with inflation persistently higher (lower) than the average have experienced lower (higher) real interest rates. This has led to divergent developments in competitiveness and, in some countries, to excessive private and public borrowing, real estate bubbles and to postpone budgetary consolidation efforts. In this compilation of notes, key monetary policy experts analyse the consequences of persistent inflation differentials for the conduct of common monetary policy for the euro area. The notes have been requested by the Committee on Economic and Monetary Affairs (ECON) of the European Parliament as an input for the September 2014 session of the Monetary Dialogue between the Members of the ECON Committee and the President of the ECB.

After the adoption of the single currency, inflation differentials in euro-area countries have persisted. Countries with inflation persistently higher (lower) than the average have experienced lower (higher) real interest rates. This has led to divergent developments in competitiveness and, in some countries, to excessive private and public borrowing, real estate bubbles and to postpone budgetary consolidation efforts. In this compilation of notes, key monetary policy experts analyse the consequences of persistent inflation differentials for the conduct of common monetary policy for the euro area. The notes have been requested by the Committee on Economic and Monetary Affairs (ECON) of the European Parliament as an input for the September 2014 session of the Monetary Dialogue between the Members of the ECON Committee and the President of the ECB.

Autore esterno

Karl WHELAN (University College Dublin) ; Zsolt DARVAS, Olga TSCHEKASSIN and Guntram WOLFF (Bruegel) ; Anne SIBERT (Birkbeck, University of London and Centre for Economic Policy Research)