This study investigates the appropriate measure for stabilizing inﬂation in the euro area. We use a model that accounts for both the heterogeneity observed in the degree of price rigidities across regions and sectors, and asymmetry of real disturbances in relative prices. Our work shows that the optimal weights to assign to each region or sector result from complex interactions between the degree of price stickiness, economic size, and the distribution of shocks within regions.
|Number of pages||27|
|Journal||International Journal of Central Banking|
|Publication status||Published - 2016|
- asymmetric price stickiness
- asymmetric shocks
- euro area
- optimal monetary policy