Inflation Targeting in the Euro Area and the Economic Stability of its Member-States

Europa Working Paper No. 2014/01

Edinburgh School of Law Research Paper No. 2014/01

23 Pages Posted: 6 Jan 2014

Date Written: January 6, 2014

Abstract

The aim of this paper is to examine whether the Eurozone constitutes an optimum currency area and by extension, to investigate the existence of a common optimal inflation rate for the member-states. For this purpose, eight euro area countries are examined. Four of the so-called European North – Austria, Germany, Finland and Netherlands – and four of the so-called European South – Greece, Italy, Portugal and Spain. The results indicate more than one group of optimal inflation rates. Consequently, this argument raise questions about the common monetary policy, as well as about the inflation-target and the macro and micro implications on the member-states.

Keywords: Eurozone, inflation-target, optimal inflation rates, monetary policy, relative price variability

Suggested Citation

Georgakopoulos, Ilias, Inflation Targeting in the Euro Area and the Economic Stability of its Member-States (January 6, 2014). Europa Working Paper No. 2014/01, Edinburgh School of Law Research Paper No. 2014/01, Available at SSRN: https://ssrn.com/abstract=2375080 or http://dx.doi.org/10.2139/ssrn.2375080

Ilias Georgakopoulos (Contact Author)

University of Edinburgh ( email )

Old College
South Bridge
Edinburgh, Scotland EH8 9JY
United Kingdom

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