We investigate co-movements and differences in inflation dynamics of different regions within and across euro area countries using a novel disaggregate dataset. We employ a model where regional inflation dynamics are explained by common euro area and country specific factors and an idiosyncratic regional component. We find that there is a substantial common area wide component, likely related to the common monetary policy in the euro area and to external developments, in particular exchange rate movements and changes in oil prices.
Regional inflation dynamics within and across euro area countriesand a comparison with the US
MARCELLINO, MASSIMILIANO;
2009
Abstract
We investigate co-movements and differences in inflation dynamics of different regions within and across euro area countries using a novel disaggregate dataset. We employ a model where regional inflation dynamics are explained by common euro area and country specific factors and an idiosyncratic regional component. We find that there is a substantial common area wide component, likely related to the common monetary policy in the euro area and to external developments, in particular exchange rate movements and changes in oil prices.
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