Euro Area Inflation : Aggregation Bias and Convergence

Monetary policy of the European Monetary Union targets aggregate euro area inflation. Concerns are growing that a focus on aggregate inflation may cause national inflation rates to diverge. While different explanations for diverging aggregate euro area inflation have been brought forward, the very i...

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Main Authors:	Byrne, Joseph P., Fiess, Norbert
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Price Level Inflation Deflation E310 Monetary Policy E520 Financial Aspects of Economic Integration F360 International Policy Coordination and Transmission F420
Online Access:	http://hdl.handle.net/10986/5482

id	okr-10986-5482
recordtype	oai_dc
spelling	okr-10986-54822021-04-23T14:02:22Z Euro Area Inflation : Aggregation Bias and Convergence Byrne, Joseph P. Fiess, Norbert Price Level Inflation Deflation E310 Monetary Policy E520 Financial Aspects of Economic Integration F360 International Policy Coordination and Transmission F420 Monetary policy of the European Monetary Union targets aggregate euro area inflation. Concerns are growing that a focus on aggregate inflation may cause national inflation rates to diverge. While different explanations for diverging aggregate euro area inflation have been brought forward, the very impact of aggregation on divergence has, however, not been studied. We find a striking difference in convergence depending on the level of aggregation. While aggregate national inflation rates are diverging, disaggregate inflation rates are converging. We find that aggregation appears to bias evidence towards non-convergence. Our results are consistent with prominent theoretical and empirical evidence on aggregation bias. 2012-03-30T07:33:02Z 2012-03-30T07:33:02Z 2010 Journal Article Review of World Economics/Weltwirtschaftliches Archiv 16102878 http://hdl.handle.net/10986/5482 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Price Level Inflation Deflation E310 Monetary Policy E520 Financial Aspects of Economic Integration F360 International Policy Coordination and Transmission F420
spellingShingle	Price Level Inflation Deflation E310 Monetary Policy E520 Financial Aspects of Economic Integration F360 International Policy Coordination and Transmission F420 Byrne, Joseph P. Fiess, Norbert Euro Area Inflation : Aggregation Bias and Convergence
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	Monetary policy of the European Monetary Union targets aggregate euro area inflation. Concerns are growing that a focus on aggregate inflation may cause national inflation rates to diverge. While different explanations for diverging aggregate euro area inflation have been brought forward, the very impact of aggregation on divergence has, however, not been studied. We find a striking difference in convergence depending on the level of aggregation. While aggregate national inflation rates are diverging, disaggregate inflation rates are converging. We find that aggregation appears to bias evidence towards non-convergence. Our results are consistent with prominent theoretical and empirical evidence on aggregation bias.
format	Journal Article
author	Byrne, Joseph P. Fiess, Norbert
author_facet	Byrne, Joseph P. Fiess, Norbert
author_sort	Byrne, Joseph P.
title	Euro Area Inflation : Aggregation Bias and Convergence
title_short	Euro Area Inflation : Aggregation Bias and Convergence
title_full	Euro Area Inflation : Aggregation Bias and Convergence
title_fullStr	Euro Area Inflation : Aggregation Bias and Convergence
title_full_unstemmed	Euro Area Inflation : Aggregation Bias and Convergence
title_sort	euro area inflation : aggregation bias and convergence
publishDate	2012
url	http://hdl.handle.net/10986/5482
_version_	1764395211166842880

Euro Area Inflation : Aggregation Bias and Convergence

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