Inflation Differentials In The Euro Area And Their Determinants ? An Empirical View

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Executive Summary

In this paper, the authors present evidence on the statistical features of observed dispersion in HICP inflation rates in the Euro area. The descriptive exercise shows that there is still a remarkable dispersion of HICP inflation rates across the member countries. They find that most of dispersion originates in the non-traded categories of the HICP. This suggests that the main source of dispersion in countries' headline inflation rates is in those components of the HICP where non-traded goods (services, (public) goods with regulated and administered prices) are more intensely represented.

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