Inflation Persistence and Price-Setting Behaviour in the Euro Area: A Summary of the Inflation Persistence Network Evidence

National Bank of Belgium Working Paper No. 95

58 Pages Posted: 9 Oct 2010

See all articles by Filippo Altissimo

Filippo Altissimo

affiliation not provided to SSRN

Michael Ehrmann

European Central Bank (ECB); Bank of Canada

Frank Smets

European Central Bank (ECB); Ghent University - Department of General Economics

Date Written: October 12, 2006

Abstract

This paper provides a summary of current knowledge on inflation persistence and price stickiness in the euro area, based on research findings that have been produced in the context of the Inflation Persistence Network. The main findings are: i) Under the current monetary policy regime, the estimated degree of inflation persistence in the euro area is moderate; ii) Retail prices in the euro area are more sticky than in the US; iii) There is significant sectoral heterogeneity in the degree of price stickiness; iv) Price decreases are not uncommon. The paper also investigates some of the policy implications of these findings.

Keywords: price-setting, inflation persistence, monetary policy, EMU

JEL Classification: E31, E42, E52

Suggested Citation

Altissimo, Filippo and Ehrmann, Michael and Smets, Frank, Inflation Persistence and Price-Setting Behaviour in the Euro Area: A Summary of the Inflation Persistence Network Evidence (October 12, 2006). National Bank of Belgium Working Paper No. 95, Available at SSRN: https://ssrn.com/abstract=1688962 or http://dx.doi.org/10.2139/ssrn.1688962

Filippo Altissimo (Contact Author)

affiliation not provided to SSRN ( email )

Michael Ehrmann

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344/7327 (Phone)
+49 69 1344/6000 (Fax)

Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

Frank Smets

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Ghent University - Department of General Economics ( email )

Hoveniersberg 24
Ghent, 9000
Belgium

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