Abstract

What is the appropriate stabilization goal of monetary policy in the Euro Area? We would like to answer this question considering ten Euro Area countries, heterogeneous in the degree of price stickiness, affected by asymmetric real disturbances both on the demand and the supply side. According to the academic literature, in this environment, the optimal target is an asymmetric price index in which higher weight is given to the region where the level of price stickiness is higher. This paper has the aim of verifying this result in a more realistic European setting in which we consider a multi-region model and we use the country micro data on price stickiness.
Lingua originaleEnglish
Numero di pagine22
Stato di pubblicazionePubblicato - 2011

Keywords

  • asymmetric price stickiness
  • optimal monetary policy

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