Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough?
Autor(a) principal: | |
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Data de Publicação: | 2012 |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10071/3687 |
Resumo: | In the euro area, inflation rates diverged after the creation of the single currency, and started to converge again after mid 2002. Against this background, this paper studies the determinants of inflation differentials in the euro area. We start by using the New Keynesian Phillips Curve (NKPC) to explain inflation differences for a panel of countries. It is found that expected inflation and exchange rate movements are important in causing diverging inflation dynamics, while lagged inflation and exchange rates dynamics are not. Moreover, the Incomplete Competition Model (ICM) adds explanatory power to the NKPC in describing inflation dynamics across countries. Not only the former model is not encompassed by the latter, but also the variables proposed by the ICM turn out as significant: the growth of nominal Unit Labour Cost and the long-run disequilibrium between prices and costs explain inflation differentials. |
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Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough?InflationBusiness cycleConvergenceNew Keynesian Phillips curveIncomplete competition model.In the euro area, inflation rates diverged after the creation of the single currency, and started to converge again after mid 2002. Against this background, this paper studies the determinants of inflation differentials in the euro area. We start by using the New Keynesian Phillips Curve (NKPC) to explain inflation differences for a panel of countries. It is found that expected inflation and exchange rate movements are important in causing diverging inflation dynamics, while lagged inflation and exchange rates dynamics are not. Moreover, the Incomplete Competition Model (ICM) adds explanatory power to the NKPC in describing inflation dynamics across countries. Not only the former model is not encompassed by the latter, but also the variables proposed by the ICM turn out as significant: the growth of nominal Unit Labour Cost and the long-run disequilibrium between prices and costs explain inflation differentials.2012-08-03T16:20:17Z2012-08-03T00:00:00Z2012-08-03info:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10071/3687eng10.7749/dinamiacet-iul.wp.2011.08Lagoa, S.info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-11-09T17:54:10Zoai:repositorio.iscte-iul.pt:10071/3687Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T22:27:15.176600Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough? |
title |
Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough? |
spellingShingle |
Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough? Lagoa, S. Inflation Business cycle Convergence New Keynesian Phillips curve Incomplete competition model. |
title_short |
Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough? |
title_full |
Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough? |
title_fullStr |
Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough? |
title_full_unstemmed |
Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough? |
title_sort |
Determinants of inflation differentials in the euro area: Is the New Keynesian Phillips Curve enough? |
author |
Lagoa, S. |
author_facet |
Lagoa, S. |
author_role |
author |
dc.contributor.author.fl_str_mv |
Lagoa, S. |
dc.subject.por.fl_str_mv |
Inflation Business cycle Convergence New Keynesian Phillips curve Incomplete competition model. |
topic |
Inflation Business cycle Convergence New Keynesian Phillips curve Incomplete competition model. |
description |
In the euro area, inflation rates diverged after the creation of the single currency, and started to converge again after mid 2002. Against this background, this paper studies the determinants of inflation differentials in the euro area. We start by using the New Keynesian Phillips Curve (NKPC) to explain inflation differences for a panel of countries. It is found that expected inflation and exchange rate movements are important in causing diverging inflation dynamics, while lagged inflation and exchange rates dynamics are not. Moreover, the Incomplete Competition Model (ICM) adds explanatory power to the NKPC in describing inflation dynamics across countries. Not only the former model is not encompassed by the latter, but also the variables proposed by the ICM turn out as significant: the growth of nominal Unit Labour Cost and the long-run disequilibrium between prices and costs explain inflation differentials. |
publishDate |
2012 |
dc.date.none.fl_str_mv |
2012-08-03T16:20:17Z 2012-08-03T00:00:00Z 2012-08-03 |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10071/3687 |
url |
http://hdl.handle.net/10071/3687 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
10.7749/dinamiacet-iul.wp.2011.08 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799134835314262016 |