TY  - JOUR
AU  - Sinn,Hans-Werner
AU  - Reutter,Michael
TI  - The Minimum Inflation Rate for Euroland
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8085
PY  - 2001
Y2  - January 2001
UR  - http://www.nber.org/papers/w8085
L1  - http://www.nber.org/papers/w8085.pdf
N1  - Author contact info:
Hans-Werner Sinn
Ifo Institute -
Leibniz Institute for Economic Research
at University of Munich
Poschingerstr. 5
81679 Munich
GERMANY
Tel: 49-89-21802748
Fax: 49-89-397303;49-89-8506434 (home)
E-Mail: sinn@ifo.de
AB  - As a result of the Balassa effect relative prices change rapidly between and within the euro countries. Thus it is impossible to find a common monetary policy that will result in price stability in all countries. Based on empirical estimates of the Balassa model, the paper calculates a minimum aggregate inflation rate which is compatible with the requirement that no country face a deflation. This minimum aggeragate inflation rate is 0.94% in the euro-11 countries and 1.13% in an extended Europe which incorporates the east European countries.
ER  -