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Euro Area Inflation (euro + area_inflation)
Selected AbstractsOil and the Euro area economyECONOMIC POLICY, Issue 60 2009Gert Peersman Summary We examine the macroeconomic effects of different types of oil shocks and the oil transmission mechanism in the Euro area. A comparison is made with the US and across individual member countries. First, we find that the underlying source of the oil price shift is crucial to determine the repercussions on the economy and the appropriate monetary policy reaction. Second, the transmission mechanism is considerably different compared to the US. In particular, inflationary effects in the US are mainly driven by a strong direct pass-through of rising energy prices and indirect effects of higher production costs. In contrast, Euro area inflation reacts sluggishly and is much more driven by second-round effects of increasing wages. The monetary policy reaction of the ECB to oil shocks is also strikingly different compared to the FED. The inflation objective, relative to the output stabilization objective, appears more important for Euro area monetary authorities than for the FED. Third, there are substantial asymmetries across member countries. These differences are due to different labour market dynamics which are further aggravated by a common monetary policy stance which does not fit all. --- Gert Peersman and Ine Van Robays [source] Does Global Liquidity Matter for Monetary Policy in the Euro Area?,INTERNATIONAL FINANCE, Issue 1 2009Helge Berger Global excess liquidity prevalent across the world's financial markets (or its sudden absence) is sometimes believed to limit sovereign monetary policy even in large economies such as the euro area. However, there is still discussion about what constitutes global excess liquidity and how exactly it shapes the policy environment. Our approach adjusts liquidity for a longer-term interest rate and output effects and focuses on US and Japanese liquidity as relevant proxies for global developments from a euro area perspective. We find that, in particular, excess liquidity in the US tends to lead developments in euro area liquidity. US excess liquidity is also consistently positive as a determinant of euro area inflation and is shown to be Granger-causal for euro area inflation in an out-of-sample forecasting exercise. There is some evidence that, at least in part, this result seems to be related to a weakening of the effectiveness of monetary policy in the euro area interest during times of excessive US liquidity. In contrast, the influence of euro area excess liquidity on euro area inflation is more limited. [source] A monetary real-time conditional forecast of euro area inflation,JOURNAL OF FORECASTING, Issue 4 2010Sylvia Kaufmann Abstract Based on a vector error correction model we produce conditional euro area inflation forecasts. We use real-time data on M3 and HICP, and include real GPD, the 3-month EURIBOR and the 10-year government bond yield as control variables. Real money growth and the term spread enter the system as stationary linear combinations. Missing and outlying values are substituted by model-based estimates using all available data information. In general, the conditional inflation forecasts are consistent with the European Central Bank's assessment of liquidity conditions for future inflation prospects. The evaluation of inflation forecasts under different monetary scenarios reveals the importance of keeping track of money growth rate in particular at the end of 2005. Copyright © 2009 John Wiley & Sons, Ltd. [source] Forecasting euro area inflation using dynamic factor measures of underlying inflationJOURNAL OF FORECASTING, Issue 7 2005Gonzalo Camba-Mendez Abstract Standard measures of prices are often contaminated by transitory shocks. This has prompted economists to suggest the use of measures of underlying inflation to formulate monetary policy and assist in forecasting observed inflation. Recent work has concentrated on modelling large data sets using factor models. In this paper we estimate factors from data sets of disaggregated price indices for European countries. We then assess the forecasting ability of these factor estimates against other measures of underlying inflation built from more traditional methods. The power to forecast headline inflation over horizons of 12 to 18 months is adopted as a valid criterion to assess forecasting. Empirical results for the five largest euro area countries, as well as for the euro area itself, are presented. Copyright © 2005 John Wiley & Sons, Ltd. [source] | ||||||||||